Skoda India considering EV, CNG options as Kylaq broadens buyer base

Skoda India is focusing on cleaner fuel options, including CNG and EVs, while compact SUV Kylaq drives volumes, expands first-time buyers and strengthens the brand in India's competitive market

Skoda Auto India is sharpening its focus on cleaner fuel technologies such as CNG and electric vehicles (EV) even as the compact SUV Kylaq emerges as the brand’s primary growth engine, expanding both volumes and the customer base in one of India’s most competitive segments.

 

While electrification remains part of Skoda’s long-term roadmap, the company is more advanced in its thinking on CNG.

 

With around 20 per cent of the compact SUV segment now running on CNG, Ashish Gupta, brand director, Skoda Auto India, said the company is actively working on a factory-fitted CNG option for the Kylaq. “This is a clear opportunity,” Gupta said, adding that multiple technical routes are being evaluated, including in-house and group solutions. He stressed that Skoda is not considering third-party retrofits and that any CNG offering would be factory-engineered. While timelines remain undisclosed, he suggested that CNG is a near-term execution.

 

 

On EVs, Gupta struck a more cautious note. “If you want to be a serious player in India, you must have an EV,” he said, confirming that discussions are active and that the focus is on an EV made in India for the Indian market, with potential export optionality. However, he stopped short of committing to a launch in calendar 2026 or FY27, noting that platform choice, localisation depth, cost viability and regulatory clarity will ultimately determine timelines. Importing small volumes of European EVs, he said, does not make strategic sense.

 

The push toward cleaner technologies comes at a time when Kylaq has fundamentally altered Skoda’s position in the Indian market, and the upcoming Corporate Average Fuel Efficiency (CAFE) Phase 3 norms will sharply tighten fleet-level emission targets, making expansion into CNG and EV no longer a choice but a compliance necessity to balance emissions as volumes rise in mass-market segments.

 

The compact SUV now accounts for over 60 per cent of Skoda Auto India’s volumes and nearly 40 per cent of overall group volumes at Skoda Auto Volkswagen India Private Limited. “Today, Kylaq contributes close to 60 per cent of our overall volumes,” Gupta said, adding that entry into the compact SUV segment was critical for visibility, awareness and relevance. “It made the brand more accessible, helped us enter territories where we were not present earlier, and allowed us to operate at price points where customers are actually buying cars.”

 

Launched in early 2025, Kylaq sold over 50,000 units in one year. Gupta said maintaining that run rate would sustain in 2026, supported by segment growth following GST changes and the ramp-up of 77 new touch points added over the past year. “I won’t give a fixed number, but the direction is clearly upward,” he said.

 

Beyond volumes, Kylaq is expanding Skoda’s buyer funnel. Around 65 per cent of Kylaq customers are first-time Skoda buyers, and nearly half of them are first-time car buyers. Female buyers registering vehicles in their own names account for 10 to 12 per cent of Kylaq sales — up sharply from 3 to 4 per cent earlier — signalling a shift in brand perception beyond Skoda’s traditional urban, premium customer base.

 

Operationally, Skoda believes it is well-positioned to support growth without aggressive capacity expansion. The group’s installed capacity in India stands at about 225,000 units annually, including sister brands and exports, with Skoda accounting for roughly 80,000 units. Production bottlenecks seen at Kylaq’s launch — largely due to variant mix mismatches — have been resolved, and Gupta said the company has sufficient flexibility to meet higher demand without adding new lines.

 

Network expansion remains a parallel priority. From about 245 touch points in January 2025, Skoda ended the year with around 325 outlets across 183 cities. In 2026, it aims to reach 200 cities and about 350 touch points, covering close to 90 per cent of India’s addressable market. “Beyond that, expansion is not economically viable,” Gupta said, noting that average throughput of about 300 cars per outlet aligns with industry norms.

 

All of this feeds into Skoda’s longer-term ambition of reaching a 3 per cent share of India’s passenger vehicle market. Gupta acknowledged this would require a broader product portfolio, not just Kylaq-led growth, pointing to refreshes of Kushaq and Slavia, new variants across price points, performance models such as Kodiaq RS and Octavia RS, and festive editions.

 

Exports and free trade agreements remain a secondary lever. About 30 per cent of production is exported, mainly to Mexico and South Africa, while Europe remains constrained by regulatory differences. FTAs are directionally positive, Gupta said, but interoperability of standards will take time before they materially change export economics.

 

Taken together, Skoda Auto India’s strategy for 2026 rests on consolidating Kylaq-led gains, expanding cleaner fuel options — starting with CNG — and laying the groundwork for a local EV. As Gupta put it, the objective now is not just to sell more cars, but to ensure the brand remains relevant, differentiated and credible as the market evolves.