How Skoda plans to make India its 5th-largest market

'The cars to be launched under the India 2.0 program will be in category of mid-size SUVs'

'The second one will be a notchback sedan, with 95 per cent localisation'

Volkswagen is banking on sister concern Skoda to revive it with an investment of €1 billion.

With a presence in the value segment, better service quality, and lower ownership cost, Skoda India’s director of sales and marketing Zac Hollis, bottom, tells Arindam Majumder that he aims to make important changes.

Skoda will lead Volkswagen’s 2.0 initiatives. What will you try to improve with the new investment?

India 2.0 was announced in July last year. This entails an investment of €1 billion.

We will pump money into tools for production, design in engineering, investment to boost the dealer network, and aggressive sales and marketing.

My objective is to get the brand ready by 2021, when the first product will be ready.

After that, we will bring in more products. I have been in this business for 28 years in several countries.

How will you make the brand more visible?

The product will be made keeping in mind the Indian market. It will appeal to Indian customers.

My job is to get the network of dealers ready and expand it, and increase presence in other cities.

We are going to double the presence from 50 to 100 cities. We have 63 outlets now; we will make it 130.

Many of these cities have very low brand awareness about Skoda product because they don’t see it on the road.

We need to improve that. A big chunk of investment will be for marketing.

The third thing we will do is overhaul and make the cost of ownership lower.

We have to become the best in terms of customer offering.

The customer wants new product. He wants prompt after-sales service.

That’s what we plan to enhance through this investment.

One of the problems for the group has been that it is not present in the value segment which has the lion’s share of the market. Will the new strategy try to tackle that?

The cars to be launched under the India 2.0 programme will be in category of mid-size SUVs.

The second one will be a notchback sedan, with 95 per cent localisation.

This means 95 per cent of the material will be sourced locally.

By that we can be very cost competitive. We have started a discussion with local vendors.

We can only be competitive in the mid-sized SUV segment through localisation as we reduce import duty tax on parts and components

But the quality we will offer will be the same global quality.

The platform that we will use is the MQB-A0-IN (Modular Transverse Matrix platform).

Which segments will you focus on as part of this revamp?

I think we have to look at segments where there is volume.

So there has to be a careful balance, because most of the volume is in the sub-Rs 10 lakh segment.

But then, when you look at that segment, the business case becomes harder.

It’s very crowded, much harder to crack. Also our engineers make high-quality cars.

As you get down to the Rs 10 lakh segment, maintaining quality becomes a challenge.

We are still discussing if we should be present in that’s segment.

But there are other segments, such as the bigger SUV segment -- something that sits between the Kodiaq and the 2.0 segment.

In terms of pecking order, how would the €1 billion investment change India’s position?

Right now, the India market is 13th in terms of revenue, for us.

I would like to see it climb to the fifth position by 2023.

That means increasing sales to 75,000 units from 17,387 units in FY18.