Skoda looks to re-enter hatchback market with Fabia

Car maker sold 45,000 units of Fabia before discontinuing its production in 2013

Skoda Auto, part of Volkswagen Group, will look at re-entering the Indian small car segment it exited in 2013 by phasing out the Fabia, a premium hatchback. Skoda may bring back the Fabia, which was globally launched in 2014. The re-entry may happen within the next two years.

"We are much closer to having a lot of confidence in that segment than ever before. Owing to congestion and parking problems people have began to disassociate small hatchback from basic transportation needs. They are open to having a good hatchback with all the features. We are convinced that the market is ready. We do want to get back into that segment, at a later time", said Sudhir Rao, chairman and managing director at Skoda India.

Fabia was launched in India in early 2008 and the company sold about 45,000 units before discontinuing production in 2013 due to dip in volumes. Volumes in 2012-13, the last complete year of operation, fell 78% to 3,343 units from 14,936 units in 2011-12. The hatchback was priced at a premium to then segment leaders like Maruti Suzuki Swift and Hyundai i20.

Fabia was launched as a premium hatchback and it was a great product. Somewhere along the way we went after volumes and gave up that premium positioning. The market was not ready for premium segment then. Buyers were not ready to pay a premium price for hatchback. We decided to get out until the market evolved, said Rao.

The premium hatchback market has now started showing growth. Japanese car maker, Honda, which had discontinued the Jazz in 2013, re-launched the premium hatchback in July last year.

The company has already sold more than the 23,000 units achieved by the previous Jazz in four years. Maruti Suzuki launched Baleno, again a hatchback in October and is seeing a waiting period of 4-5 months. Hyundai's Elite i20 continues to see a strong pull in the market.

Rao said Skoda is looking to grow at a double digit rate in the current calendar year. The company saw a growth of 4% last year to sell about 16,000 units with contribution from models like Rapid, Octavia, Superb and Yeti. "We will be launching a couple of products this year and one more next year. We increased sales last year without a launch," said Rao. Interestingly, Skoda's parent company, Volkswagen, saw its India sales decline 2.4% in last calendar year.

In the current quarter, Skoda will launch the new Superb, built on a new platform. Rao did not disclose details of the second launch planned for this year and the plan for next year.