Focus on lowering product cost to take on Asian rivals: Skoda

Tags: News
Czech car maker Skoda is focusing on lowering cost of product development and increased localisation for the Indian market to take on Asian rivals, as it seeks enhanced position in the value for luxury segment.

The company, part of the Volkswagen group, also ruled out notions that it is scaling down business in India saying it has been consolidating its operations for an overall profitable sustainable business in the country.

"Currently we are in a phase of execution of product development strategy in which we are learning how to lower the cost and increase localisation so that we can compete with Asian rivals but at the same time retain our inherent Skoda quality," Skoda Auto India Chairman and Managing Director Sudhir Rao told PTI.

He said the next six to nine months, the company would have a clear cut idea on how to take it forward but did not comment on the company's new product programmes.

It is understood that a new Rapid with smaller engine and transmission slated for launch this year will be the first product to emerge from the company's current programme of developing products at lower cost.

"We have taken a conscious decision to focus on value for luxury and not the volume segment. In the short-to-medium term we will be focusing on the mid-sized sedan Rapid segment and above," Rao said, adding, the aim was to achieve a sustainable profitable growth in India.

The company's current localisation level in the Indian product portfolio stands around 60 per cent.

Rao, however, did not rule out exiting the volume car segment all together. Skoda has recently phased out its compact car Fabia in the Indian market.

In the segment in which the company is present, Skoda Auto competes with Asian rivals including Honda, Hyundai and Toyota.

"Next year, depending on the results on the new strategies, will see a new phase of products from Skoda stable. By the end of the next year, we would have clarity on products and if the results show that we could come with a sustainable profitable model, then we can even look at segment below Rapid," Rao said.

On reports of Skoda curtailing operations in India, Rao vehemently denied it saying: "We are not scaling down operations at all. We are only consolidating our operations, making it leaner but at the same time improving our customer engagement and satisfaction while enhancing quality."

Apart from the Rapid, Skoda India is also expected to launch a refrehsed version of its sports utility vehicle Yeti by the end of third quarter.

When asked about the sales projections for the current year, Rao said: "This year its going to be a flat year for us as Fabia is out and even the overall industry is still down".

The company sold over 22,000 units last year.

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