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SkodaAuto likely to set up CKD unit

V Phani Kumar in Mumbai

SkodaAuto India, the subsidiary of the Czech auto maker, which currently assembles semi-knocked down kits of the Octavia at its Aurangabad plant, may set up a new plant to assemble completely knocked down vehicles.

Having completed two years of operations in India via the SKD route, SkodaAuto India, according to government regulations, will now have to adopt the CKD assembly route to produce cars before the end of its third year of operations.

Top company executives said the cost effectiveness of operations will play a key role in deciding whether Skoda will continue to assemble cars at Aurangabad or at a new location.

Imran Hassen, managing director, SkodaAuto India, said, "There is a possibility that we may assemble CKDs at a new plant other than at Aurangabad. The decision will depend on the cost-effectiveness of our operations."

"CKD assembly is the fourth phase of our strategy for India, and we will announce our plans by the end of January," he added.

Even as export obligations and mandatory localisation obligations are no longer applicable, Hassen said Skoda, which currently does not source any parts used in the Octavia from India, is open to localising in future.

However, company executives say the decision to localise will again depend on the quality and price of parts available locally.

"Any decision to localise will also have to be approved by our parent, and will happen only if we are satisfied with the quality and cost issues," they said.

Meanwhile, at a press conference in Mumbai on Thursday, the company gave a sneak preview of Octavia's top-end luxury variant, Laurin & Klement, which is slated for launch in India by the end of January.

The vehicle, which offers better performance and features, is expected to be priced around Rs 13-14 lakh (1.3-1.4 million).

Skoda, the Czech subsidiary of European auto giant Volkswagen, is celebrating the first anniversary of the Octavia in India on Saturday.

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