[1100D]

Originally Posted by Sommos

This is not unique case for VW India, the same thing is happening in Europe also : German auto giant Volkswagen is having trouble with its subsidiary Skoda.

because Skoda doesn't make enough profits to offset potential losses at Volkswagen.

Why not axe the VW brand instead? The problem is that the Skoda brand is not making enough profits, but then the VW brand is making losses. So isn't it logical to eliminate the loss-maker and use its capacity to make more of the profit making brand?

Actually this is also a sort of normalisation as the VW brand is sort of caught in a Sandwitch between Skoda and Audi. Practically VW is not much needed. Value conscious customers remain delighted with SKODA, those who want a bit of snobbery buy Audi, simple.

[invidious]

Fairly silly. Why lose goodwill? If they want a low-end brand, they should have introduced SEAT in India. So, they could sell SEAT, Skoda and Audi. If they have any marketing savvy - which is something the Germans are not known for; they are great engineers but not half as marketing savvy as the Americans then they will localize under the SEAT name. Let Skoda and VW be at the same position - the money is going to the same group for crying out loud.

[amit]

It will be interesting to see how VW manage to position Skoda lower down the brand quotient. I think it's easier said then done and mere localisation is not going to do it.

Originally Posted by gandalf

I think it is a goood thing for skoda actually. Bringing the brand value down means that they would be a brand like say Maruti. Hence service costs and experience should be similar to Maruti. Wouldnt that actually increase the sales of Skoda

I am sure VW is not planning to position Skoda at Maruti levels!

[Omtoatom]

Weird and inexplicable! Why would you want to erode precious brand value that has been built over the years through careful planning, positioning and execution?! Ain't making no sense to me whatsoever.

If VW aims to be a premium brand, it is going to have to come from very specific strategy and action. Not by downgrading Skoda. Moreover just blindly following your global strategy might not be the best approach in our marketplace. Historically, the Indian market has bucked many a global trend making top honchos look like fools; and how!

GTO makes a glorious point. Make your offering premium first rather than correcting/cannibalizing your other brand. Do an internal autopsy across all aspects of your business right from product to after sales. Right now, car for car, Skoda trumps its cousin in almost all aspects. They must be doing something right. So there's a lesson right there!

[amitg79]

A price correction is always welcome. But won't VW be shooting themselves in the foot because of this?

If they re-position Skoda lower, the price difference will be so big that people may not even consider the VW counterparts. For example, the Skoda Rapid is cheaper than the VW Vento already. It is the same car, after all. So, after the re-positioning, if the Rapid becomes even cheaper, it will surely dent the Vento's sales.

This re-positioning move must be accompanied by VW increasing the 'premium-ness' of its products. Say, for example VW keeping the TSI engines for themselves and equivalent Skoda cars get the MPI engines, but are priced way cheaper. Then it might work.

Also, if they introduce the Skoda Citigo (Skoda's version of the VW Up!) as an entry level hatch, it might help boost volumes and maintain a difference between the two brands.

Edit: And oh, before anything else, both brands have to shore up the after-sales. In a big way.

[Nilesh5417]

Whats re-positioning or making it less premium etc really about? How will it translate into a Skoda product is what i'm interested in seeing. Does it mean that the Skoda cars now come with less features, less trim options and fit-finish than the VW cars? Does it mean Skoda moves out of the space the VW is expected to be in?

What ever it means, VW can't ignore Skoda. They have a reputation for being built to last (if you don't get a lemon in the first place!) and fun to drive.

[Sinner666]

Hah!!

Another example of a glorious marketing oversight. Brand values & positioning is planned, implemented and achieved over decades, not random on the fly decisions as VW seems to be doing. If they were so concerned about VW branding, they should have thought about it when they came into India with Skoda.
Although, in some way it reminds me of the Nissan-Renault waltz in India with the Sunny-Scala, Micra-Pulse couples.

[raul]

Given the latest auto figures something needed to be done. Status quo in the face of shrinking market is not a recipe for success. VW is a global leader and they need to generate volumes. I think this is overall positive.

Both Skoda and VW products are overpriced for volumes, and need to be reviewed. Why sell 100 Yeti's a month when you can sell 1000 plus by tweaking the pricing and value proposition. The market is definitely there.

[StarrySky]

I think the problem is that before VW arrived, Skoda had already achieved a premium brand status in India and their cars were priced accordingly. When VW cars were lauched, they had to price it higher than Skoda, simply to keep VW's positioning as more premium than Skoda.

Now neither Skoda nor VW is particularly great VFM. The market thinks so too, with them losing ground in every segment. Fabia+Polo combined cannot touch i20, let alone Swift. Vento+Rapid is nowhere near Verna, even City in some months. We are starting to see the same with Laura+Jetta v/s Elantra as well. Superb+Passat is having an easier time due to lack of credible diesel-engined competition.

They need to rationalise Skoda pricing first in order to do the same with VW pricing in the next iteration.

[S_U_N]

If this is true, it is purely an ego clash somewhere on the top. A German parent and Czech child which has been adopted. Who should the management be with?
Not very uncommon when there are acquisitions. You are bound to get step-motherly treatment.
VW has spent a lot on building their brand in India (the Times of VW advt and the 'vibrator' advt.) and they cannot let go all that money. They will have to increase the prices further (and hence make more profit per car) or reduce prices of Skoda cars.
I am wondering what the team in Aurangabad is going through right now.
Will this affect quality of Skoda cars? Yes. Skoda is already giving quality better than others at the current price point. So, with lower pricing, the fit/ finish will probably go down.
Skoda recently removed all discounts on Fabia. It would be interesting to see their next move. Will they stop selling Fabia completely? Or rebrand it under VW and sell it as something else at a higher price?

[amitayu]

this looks like a case of egos rather than a business model based decision. The parent company is sulking over the fact that the flagship marque rakns below one of the lower brands.
given, both are doing pretty poor numbers, trying to downgrade the relatively better off brand simply does not make sense.
Why doesn't VW Group try to bring the UP in the Skoda variant and try to grab the B hatchback segment instead? a volume generator is what both the brands need in anycase.
With Polo having some reputation in the higher end hatckback market, UP in the lower price segment from Skoda would give the parent company enough coverage over the hatchback range, and also allow the image differentiation they want.

[dkaile]

Thomas Kuehl moves from Skoda to parent, VW Group. Part of restructuring strategy?

http://autocarpro.in/contents/NewsDe...=1&NewsID=1914

[hrman]

Originally Posted by S_U_N

Skoda recently removed all discounts on Fabia. It would be interesting to see their next move. Will they stop selling Fabia completely? Or rebrand it under VW and sell it as something else at a higher price?

As per the recent interview, the New MD does not think so. As part of the strategy for Skoda India, he says they target the refreshed Fabia to sell at least 75000 to 100000 per annum, so we can expect it to be competitively priced with upto 90% localisation.. This may come with a curtailment of features, who knows.

http://www.thehindubusinessline.com/...ue&ref=wl_home

[sunsetorange]

(Marning sir,

Skoda Fabia all models
INSURANCE OFFER FREE

Skoda Rapid all models TDI
INSURANCE OFFER FREE

Regards,
GURUDEV MOTORS
Trichy.)
I got this text an hour ago.

[puchoo]

Its a bit difficult to understand how VW plans on achieving this.

In order to make it less premium Skoda cars would need to 'step down' in terms of build quality and the features they offer , simply reducing the price and keeping the same quality will translate into them being even more VFM for many people thus complicating issues further for VW.

If they reduce prices and also reduce features and overall quality , then Skoda might land up in a position where they simply cannot compete , which should also not be the intent because that would reduce numbers.

The positioning strategy cannot result in numbers being reduced for Skoda , if VW is willing to accept that as part of their gameplan , then instead of spending lots of money over the next few years they might as well remove Skoda from India.