Skoda Auto Volkswagen India expects to move close to breaking-even in 2023

The VW Group's local arm is counting on higher sales in domestic and exports markets

Skoda Auto Volkswagen India expects to inch closer to the break-even levels next calendar year as it sweats the investment made in the country as part of its India 2.O strategy and ramps up the volumes for the domestic and export markets, Thomas Schaefer, Global CEO of Škoda Auto said in an interaction on Tuesday.

“We need to get the numbers. We have been producing low volumes in the past. Our game is volumes. Therefore, the factory has to be utilised fully,” Schaefer told Business Standard at a virtual roundtable from Prague. There is a need for deeper—part by part localisation, said the Skoda boss who is set to take over as the Volkswagen Group CEO in April this year.

“There’s a lot of opportunity. The path is clear, we know where to go. We have great products, good teams and great attention from the public. I think it can be done,” he added.  The company is now focused on working off the heavy investments it made under India 2.0 and optimally utilising its existing facility.

The European carmaker is also betting on exports to utilise its facility optimally. It  aims to grow its exports by more than 40 per cent in 2022 with 50,000 units. India will serve as an export base for markets including South East Asia and Africa markets.

Schaefer’s confidence to do better in the world’s fifth largest auto market stems from the success of the models which has helped the firm double its sales.

Earlier on Tuesday, speaking to the global media post the 2021 earnings call, Schafer said Skoda is on course for success outside of Europe in countries like India. Our sales figure in the region has more than doubled.”

The India 2.0 strategy was an affirmation of Volkswagen Group’s commitment to the Indian market and they have stayed the course with some good model launches, said Ravi Bhatia, president and director, JATO Dynamics. The move to steer away from the low value, small hatches and the focus on more profitable higher end models has helped. They will reap good dividends if the volume run continues,” said Bhatia.

Skoda has invested Euro one billion for four cars –Skoda Kushaq, Skoda Slavia, Volkswagen Taigun and Volkswagen Virtus. It is now working on the next phase of investments in a country where it has struggled and been a fringe player with less than 5 per cent share in the competitive passenger vehicle market. India 2.5 will include a small sub-4 metre SUV – which will cater not only to India but also other emerging markets.

Meanwhile, Skoda has plans to get into the EV segment in India. “Globally EV is the trend and India will be no different,” said Schaeffer. The company will have a top-down approach for the segment—first bring the Enyaq iV, an imported electric in the premium segment. It will be followed by more affordable EVs.  “We need more models below the Enyaq; in the mass market,” he said, adding that three more models below the Enyaq are in the works for Europe. It would be introduced in India if the demand for EVs picks up in India.

Schaefer expects India to play a much more significant role in the VW Group's future – not only in EVs but also in conventional petrol run vehicles for the next decade and a half.