Skoda is actively pursuing a local partner to better navigate India’s highly competitive car market. The company aims to balance cost efficiency with the quality European cars are known for.
Thomas Schäfer, Skoda’s CEO, acknowledges the challenges faced in India due to over-engineering vehicles to meet internal expectations, which has driven up costs and weakened their competitive edge. He highlights the need for engineering ingenuity that balances cost and quality, citing their sub-4 meter car as an example of significant cost reductions without sacrificing quality. This approach will be applied to future models to enhance market appeal.
Strategic Local Partnership
A local Indian partner can significantly boost Skoda’s cost efficiencies by securing better deals with suppliers. “We can benefit from their local competence (of a local partner) from them being much closer to the market than we are. In terms of procurement and sourcing, they have certain connections that we probably don’t have and therefore they are then able to get the best prices,” Schäfer explains.
Market Potential and Strategy
Skoda aims for India to become its second-largest market once sales of its sub-compact SUV and refreshed model lineup gain momentum in 2025. Despite India’s fragmented and competitive automotive landscape, Schäfer sees immense potential.
India as a Regional Hub
Skoda’s plan includes using India as a hub for the ASEAN region, leveraging the combination of sourcing and engineering capabilities in India to serve other parts of the world. This approach underscores India’s strategic importance in Skoda’s global growth plans.
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