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Old 4th November 2016, 14:24   #1
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Default Skoda to focus on premium vehicles for the Indian market

Skoda has reportedly revised its strategy for the Indian market. While all other automakers are fighting to get a share of the country's huge small car business, Skoda will be focusing on the premium vehicle segment. The company's Managing Director, Sudhir Rao, revealed these future plans, and also confirmed three new launches in the premium space in the next one year.

The MD has further confirmed that there are no plans to enter the small car business in the next two years. The automaker is currently banking huge on its sedan offerings - Octavia, Superb and the recently launched Rapid facelift.

Out of the three new launches scheduled, the most important introduction will be the company's flagship SUV - the Kodiaq, which marks Skoda's first attempt to build a 7-seater offering. The automaker had already confirmed that the Kodiaq will be making its Indian debut later in 2017. Another model confirmed to launch in 2017 is the Octavia RS, which is the standard Octavia's performance-oriented sibling.

Skoda saw its sales peak in India in the year 2012, when it managed to sell over 35,000 vehicles in the country. However, every passing year since then saw a decline in the market share. This loss of customer base was attributed to the company's inefficient after sales service experience and some cases of unreliable dealerships. Acknowledging the above two factors, the Czech automaker has been working on improving the customer service experience, by launching new prepaid maintenance packages, a 4-year standard warranty, and a MySkoda App for easier single-window interaction. The company has even terminated a few dealerships that were found to be at fault in some customer reported cases.

With all the changes made, Skoda is expected to end this year with 16,000 unit sales, and is aiming at taking this number to 20,000 during the next year.

Source: ET Auto

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Last edited by dZired : 4th November 2016 at 14:43.
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Old 4th November 2016, 17:32   #2
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Default Re: Skoda to focus on premium vehicles for the Indian market

An interesting move but given that feature and spec wise the VW comparable equivalents are just marginally better to demonstrate premium, i wonder what the overall idea is.
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Old 4th November 2016, 17:47   #3
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Default Re: Skoda to focus on premium vehicles for the Indian market

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Skoda has reportedly revised its strategy for the Indian market
Sorry, but how many times will they change their strategies if at all they have some beyond boardrooms. In my opinion, they have failed mostly, given the time they have been in the Indian market and some of the best products they had.

What do they think now, Target high net worth people just because they have a new strategy or one / two new products? I am not sure if someone will actually save a couple of hundred thousand and pick a Skoda over say Audi or BMW. They are a miser company with a shortsighted approach and will have difficulties operating here no matter which segment they serve.

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Old 4th November 2016, 19:27   #4
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Default Re: Skoda to focus on premium vehicles for the Indian market

Skoda had a great opportunity to do very well here. They had an early start with excellent products, then there was this huge craze for diesel automatics which Skoda had a near monopoly.

Unlike in developed markets, there is hardly any protection for consumer rights in our country and businesses are too eager to cheat customers. It doesn't matter how you operate in other countries but here in India, a company needs to tightly control the customer experience and not leave it up to the dealers and third parties.

I am not sure what they mean by premium (is Rapid a premium car according to them?) but I think they have decent products across the range, they just need a miracle in terms of improving customer experience. If I were VW/Skoda, I would target the Innova. I can't believe no one is challenging the Innova.
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Old 4th November 2016, 19:39   #5
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Default Re: Skoda to focus on premium vehicles for the Indian market

This is a pretty good strategy. The sub 10L car segment is over-crowded and Maruti and Hyundai pretty much have this covered between them. The rest are just feasting on scraps.

Skoda Octavia is second only to Toyota Corolla in the D1 segment and Skoda Superb is second only to Toyota Fortuner in the D2 segment. With the luxury germans' 3-series, C-Class and A4 being priced north of 40L these days and the A3/CLA priced in the high 30s, there is a big wide yawning gap between 20L and 35L waiting to be filled. This is the gap Skoda is and will be eyeing with Octavia, Superb and the Kodiaq. Customers wanting to upgrade from the C2 segment in the near future will have lot of options with the Skoda offerings. I think Skoda has a winning strategy on their hands.

Although the D-segment has been written off in recent times, I think it will make a big comeback when the current C2 segment customers look to upgrade. Time will tell.
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Old 4th November 2016, 20:57   #6
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Default Re: Skoda to focus on premium vehicles for the Indian market

I wonder what their definition of premium is. Perhaps it is a status symbol in the sense of buyers being rich enough to be able to accommodate the risk of buying a lemon.

And also, why cant 'small car' and 'premium' go together? Although this one might have more to do with the market attitudes than anything else. Personally, I would gladly buy a Golf if it were on sale, over a D-segment car.
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Old 6th November 2016, 12:30   #7
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Default Re: Skoda to focus on premium vehicles for the Indian market

I think this is a great move because unlike in other countries, in India Skoda is known to people as a premium brand only. More so, some people even think of it as more premium than Volkswagen even.

So if you consider all the other car's in the premium segment like Audi, BMW and Merc, Skoda is great VFM. In fact it renders many car's like the A4, A3, CLA, X1's etc useless/ pointless.

With the launch of the new Kodiaq, trust me even Landrover will be hiding for cover.
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Old 7th November 2016, 06:46   #8
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Default Re: Skoda to focus on premium vehicles for the Indian market

There is a lot of choice in the market nowadays.
But the middle order remains relatively unfulfilled.

Skoda can take a very comfortable position in the 18-35 lac bracket which no longer seems unaffordable.

If I take my extended neighbourhood as a case in point, there are a myriad Fortuners, huge numbers of Innova Crystas and a host of other expensive cars like BMWs and Mercs and Audis and Range Rovers and Jaguars and all the rest of it.

Today, it appears that no one is deterred by the cost of acquisition of a new car, with the availability of easy loans and easy credit. It seems to have become so easy as to be par for the course rather than something unattainable.

The car scape around us has changed incredibly - I remember in the 1980's you were considered a really "Big dude" if you owned even a Contessa and in the mid 1990's owning an Esteem meant you were amongst the top rung! I also remember in the early 2000's owning a Skoda Octavia was only for the really well off guys. (Even nowadays occasionally one can see one of those older, well maintained Octavias and Octavia Combi cars running about here and there. Always head turners for me!

Today, with the absolute profusion of Mercs and Beemers and Audis and Jaguars and what have you, I think very soon, the reverse "snob value" concept may well apply - better to ditch the big brands and their accompanying ostentation, to buy a great "value for money" car like a Skoda which gives you all the features of the bigger marques but at 2/3d's or even 1/2 the price!

But in order to introduce consumers to the more "solid feel" of an European car, it would be nice if Skoda would consider a nice Premium Hatch too like a Fabia RS.

If the nutty pricing of the Polo GTi is anything to go by, then I guess a Fabia RS may do well to come in at a price of maybe 16-20 lacs and attack the "hot hatch" market very seriously!
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Old 7th November 2016, 11:09   #9
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Default Re: Skoda to focus on premium vehicles for the Indian market

In other words, Skoda is saying that it's taking the easy, effortless approach in India. Low volume premium products require minimal investment (high import content), easy CKD (vs full fledged manufacturing) and lesser marketing effort (than selling a mass market car). All they have to do is cut-copy-paste their international line-up.

Skoda doesn't have the dealership strength either. IIRC, they only have 60 odd dealers left in India. And most of them are rotten.

With only 0.44% market-share after spending 16 years in India, is it any surprise that the global HQ has switched off the investment tap? Heck, they don't even get proper car allocations - remember the Octavia's supply issues and the Superb diesel which was available 8 months after launch?
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Old 7th November 2016, 11:51   #10
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Default Re: Skoda to focus on premium vehicles for the Indian market

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Originally Posted by shankar.balan View Post
Today, with the absolute profusion of Mercs and Beemers and Audis and Jaguars and what have you, I think very soon, the reverse "snob value" concept may well apply - better to ditch the big brands and their accompanying ostentation, to buy a great "value for money" car like a Skoda which gives you all the features of the bigger marques but at 2/3d's or even 1/2 the price!
There already is an alternative and reverse snobbery for those who dont want the big name brands -- Toyota.

On a different note, I am not sure how Skoda cars are value for money by any stretch of the imagination. The correct way to calculate true cost to own is

Original price (1)
LESS Resale Price discounted @ cost of capital (2)
ADD maintenance costs (3)
ADD fuel costs & running costs (4)

The reason why Toyotas are huge VFM is because although they are very high on (1), but they are attractive on (2) and (3).

If you want to buy Skodas for how they feel, and for the fact that for a minimal initial capital investment you can get a premium-feeling car, thats fine. However, VFM goes far deeper than just the purchase price of the car. All the Skodas that we have owned (aside from our first Octy) have done very poorly on 2, 3 and 4.
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Old 7th November 2016, 15:58   #11
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Default Re: Skoda to focus on premium vehicles for the Indian market

Dejavu?

http://www.team-bhp.com/forum/indian...erations.html: (VW likely to curb Skoda India's operations) "We are re-aligning our Skoda strategy... we are looking at it,"

http://www.team-bhp.com/forum/indian...l#post3233143: (Skoda: Steps towards Transparency - Online Service Cost Calculator & Owners Manual) "focus on the premium car segment instead of the mass market of small cars
"

http://www.team-bhp.com/forum/indian...nd-india.html: (VW to Reposition Skoda Brand in India) "may see Skoda moving down in the pecking order"

http://www.team-bhp.com/forum/indian...ritizing.html: (Autocar: Skoda Auto India re-prioritizing) "The MD seems to have set a personal goal of selling close to 100,000 Fabias four years from now"


So this is how a person at leadership manages to save his job for the past half decade, earning huge money, showing nada results, and churn "destined to fail" strategies to keep the hope afloat.
Attaboy Sudhir Rao
.
You are hereby awarded the trophy of Empty Suit.

Last edited by alpha1 : 7th November 2016 at 16:02.
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Old 7th November 2016, 16:18   #12
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Default Re: Skoda to focus on premium vehicles for the Indian market

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Originally Posted by androdev View Post
Skoda had a great opportunity to do very well here. ... ... ...

I am not sure what they mean by premium (is Rapid a premium car according to them?) ...
When I came here, twelve years ago, everybody was telling me what a premium car Skoda was. Well, in a way, it was true --- but Skoda was not only overtaken, but left, broken down, at the side of the road, by the rest of the market, including its VAG siblings, VW and Audi. Does anybody even think it is "premium" in India, any more? I don't think so.

Which is not to say that they do not make some great cars. They do. But a lot of us never even thought of visiting their showrooms when we bought our Polos.

VAG group is much more than Audi/VW/Skoda, but it doesn't look tome as if VAG has ever thought properly about the relative positioning of its brands in India.
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Old 7th November 2016, 16:33   #13
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Default Re: Skoda to focus on premium vehicles for the Indian market

Why are they staying in India? Selling around 12000 cars p.a. hardly justifies keeping an entire organization and a dealer network going.
If they hope to regain customer confidence, its easier said than done.
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Old 8th November 2016, 00:04   #14
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Default Re: Skoda to focus on premium vehicles for the Indian market

It is strange that everyone here is looking at volumes and market share but no one is looking at margins! Margins are huge higher up the chain. There are brands that do well in the lower echelons but can't break through the higher segments and then there are the luxury car makers who cannot venture into the lower segments for fear of brand dilution. Fortunately or Unfortunately Skoda finds itself in neither segments and can therefore pioneer innovation in the gap in between. "Premium" is relative and is an intangible.
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Old 8th November 2016, 00:15   #15
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I don't think what Skoda wants to do is by choice. There is no other option really. They do not have and will not have India specific models ever. The only reason they are even selling the Rapid is because it's a Vento clone, else what can they offer in India? The Fabia needed to be heavily localised like the Polo if they were to look at a hatchback. I think they could have actually done this, launch a Polo in Fabia's disguise. The Indian fabia was no way related to the Polo in terms of chassis and interiors so they couldn't price it competitively. Wouldn't have done no harm if they attempted a hatchback version of the Rapid!

Anyway, it looks like they have let that pass and now want to just concentrate on the Octavia, Superb and the new Kodiaq. The Rapid will continue to be the entry level model until they look at a completely new platform for the vento.
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