[MCR]

This puts Skoda in the corner. They are already struggling with inconsistent A$$ and lower volumes.

But how would one go about repositioning the brand? some pointers;

1. Lower the technology used(or just don't upgrade the current technology).
2. Switch to cheaper variants of engines.
3. Increase the localization content, there by reducing the prices and also quality to an extent.
4. Reduce the overhead costs.
5. Showcasing the product as a commoner!

Not a surprising move considering the fact that VW as a brand is considered to be above Skoda and below Audi every where in the world. This way VW can control what they want to sell in India. Expect more cars to be released from Skoda stable in the future (read as after 2015) badged cheap and economical!
This was also one of the main reasons VW wanted a JV with Suzuki, so that Suzuki cars can be released badged as Skoda!

[Sinner666]

http://www.wpp.com/wpp/marketing/bra...-it-anyway.htm

An interesting read, particularly relevant to the topic in discussion.

The underlying message is 'Marketer's do not decide a brand's ultimate meaning - consumers do'.

[MaddyCrew]

These guys just seem to have lost it completely. What has the top management of VW India been smoking off late??

IMO India for one is not a market that goes with the badge alone. Be it a Maruti or a Skoda (or a VW for that matter), most Indian buyers look at the "value" of the whole package rather than any specific attribute of the actual vehicle. The same applies to the Renaul-Nissan combo as well. In India, this logic should apply to anything less than a Merc/ BMW/ Audi - but interestingly even for these "proper" luxury brands, the latest trends show that people have started to look at the package rather than the snob value alone.

I don't know why, but I have a feeling that this price cut might actually work in Skoda's favor in the medium to long term. The reasons:
1. If indeed these price cuts are based on localization alone (and not quality cuts), then Skoda cars would become even more better "packages" than they already are.
2. Though not upto the standards of Maruti/ Hyundai, Skoda have been improving quite steadily on the A.S.S. front and are clearly ahead of VW at the moment.

These two factors should be enough to push up the value of Skoda a few notches higher.

IMHO, if VW is indeed serious about increasing its foothold in India, then they should focus on:
1. Reigning in their dealers and teaching them how to deliver a truly "premium" experience to all its buyers.
2. Improving parts availability and revamping the overall A.S.S. experience - right from handling customer communications to meeting delivery SLA's.
3. Bringing in their cars with features that clearly sets them apart from comparable Skoda offerings. This could be in terms of Trim Levels, Engine Options, Paint Options and what not.
4. Leverage the supplier base for Skoda (already in place or being readied) and pitch their cars at price points that atleast sounds reasonable - even with all the additional 'bells and whistles'.

[shadows123]

I dont buy this repositioning argument of VW about Skoda. Generally, In India it means localize the car with poor quality of material and make it look cheap and re-release it at a Lakh or so less than current price conveniently ignoring the vast difference in quality between the two(Am looking at you Toyota for the Liva horror).

If at all, anything needs repositioning, it is VW Group's attitude towards India and its car buyers esp in After sales and Servicing costs. The horror stories of some customers refuses to die down and they keep on coming showing VW Group's intentions in India. If they were indeed serious then they should handle probelmsmore professionally and stop treating India like a third world country where they feel they are doing customers a favour by selling their cars! That's my 2 cents.

Finally, You can possibly make a Skoda cheap but when you have priced your spare parts and Servicing similar to a Merc people are not going to buy it end of!

[Accius]

Skoda should be increasing localization in order to price their products competitively as it is loosing out on competition inspite of having great products such as Fabia and Rapid. Also AS* should be looked after as I have my self avoided going in for Skoda after hearing those horror stories about their AS* quality and costs.

[shankar.balan]

Step back 8 years and read this lovely post of Revvmaster's!

Thats what Skoda stood for, in India at the time and I guess, still stands for in many ways.

I guess that with more vehicles on the road and a surge in demand for more premium vehicles in the country, they have also fallen down on the job here and there.

But overall, their cars are solid and exude a certain feel good european-ness that not many other brands can rival.

No idea why. But as an earlier post said, it is the consumer who defines the brand's premium-ness and not always the other way round!

Enjoy this excellent article below - link from TBHP!

http://www.team-bhp.com/forum/indian...ase-study.html

[troublemaker]

Looking at the numbers, they have to do something. Now this something could be combination of things. IMHO, if they want to bring Skoda in the same line as their international business, it is okay. The fact is that Skoda is not their premium brand. If they can sell it at a lower profit margin (really??), I'm sure they can sell big and make more money and be successful.

They have to get their A*S straight but that they have to do it anyways.

[lapsi]

Skoda is a cheap, entry level, European brand but it looks like the stuff available in the market was of such poor quality that the basic product offered by Skoda was perceived "premium". It reminds me of the saying: "In the land of the blind, the one-eyed man is king".

I checked out the prices of Skoda vehicles in the Czech Republic. Here is a link to Skoda Cz. The prices are mentioned in Czech Crowns. You can find the exchange rates here. Over there, the Octavia starts from about INR 9.25 lakhs; the Yeti is available for less than INR 10 lakhs; and the Superb for less than INR 16 lakhs.

The Czech prices would include Czech Excise which would not have to be paid in case of exports. In India, Customs Duty paid would be set off against the Excise liability and they have an agreement with the Maharashtra Government that they would not be liable to VAT.

All said and done, if the prices in India were similar to what is offered in the Czech Republic, Skoda sales would have been much higher than the dismal figures that they now generate.

I think VW is right in their decision to reposition Skoda at a level which it really is. A cheap, entry level, Euroean brand and it should be priced as such.

[avira_tk]

Originally Posted by lapsi

Skoda is a cheap, entry level, European brand but it looks like the stuff available in the market was of such poor quality that the basic product offered by Skoda was perceived "premium". It reminds me of the saying: "In the land of the blind, the one-eyed man is king".

All said and done, if the prices in India were similar to what is offered in the Czech Republic, Skoda sales would have been much higher than the dismal figures that they now generate.

I think VW is right in their decision to reposition Skoda at a level which it really is. A cheap, entry level, Euroean brand and it should be priced as such.

Skoda was intended to be a cheap entry level brand by VW, the position they enjoy in India is due to the fact that when comparing like to like, VW to Skoda, it is a VFM product. Skoda enjoys a premium tag because they entered the market with the Octavia which was not mass market. The product was not basic when it was launched.

Indians are smart to see the that VW offers nothing better in their cars, its not the one-eyed king story. VW is more accurately the story of the naked king and the customers who called their bluff.

VW current strategy will ruin an existing brand, just to massage their egos. VW is not a widely recognised brand in India, that is the reason they write volkswagen in big block letters on their cars, most people can't identify the brand the logo stands for.

[vb-saan]

Originally Posted by lapsi

Skoda is a cheap, entry level, European brand but it looks like the stuff available in the market was of such poor quality that the basic product offered by Skoda was perceived "premium". It reminds me of the saying: "In the land of the blind, the one-eyed man is king".
I checked out the prices of Skoda vehicles in the Czech Republic. Here is a link to Skoda Cz. The prices are mentioned in Czech Crowns. You can find the exchange rates here. Over there, the Octavia starts from about INR 9.25 lakhs; the Yeti is available for less than INR 10 lakhs; and the Superb for less than INR 16 lakhs.
I think VW is right in their decision to reposition Skoda at a level which it really is. A cheap, entry level, Euroean brand and it should be priced as such.

I agree that Skoda is not really a premium brand, but calling it a cheap is a bit farfetched, especially after comparing the prices in Europe. A Superb costing INR 16 lakhs in Czech is not that surprising. The Passat range in the UK starts around the same price as well. An entry level car in one country maybe a luxury offering in another.

I personally don’t think that VW as a brand is superior to a Skoda. But yes, both the brands' models are a bit overpriced in India.

[Mpower]

Originally Posted by greenhorn

I think this is a dumb decision. Why would *any* company throw away so much brand value that has been created and throw it away ? smacks of what coca cola tried to do with thums up.

You do make a compelling point, but there is an upside, which is...when they revise prices down, it will attract a whole new breed of buyers who aspired for Skoda but were not able to afford it earlier.

[one-77]

Most people I know stay away from Skoda due to their expensive maintenance. Almost everyone I've spoken to that drives a Corolla concede that the Laura is a far better car in almost every aspect, but did not buy one owing to the upkeep costs. I think it's this perception that they should change first. Make their service and parts costs reasonable, and be a little nicer to customers, and sales will pick up even without any "repositioning".

[swiftnfurious]

Originally Posted by Mpower

....when they revise prices down, it will attract a whole new breed of buyers who aspired for Skoda but were not able to afford it earlier.

This definitely is a good strategy. At the same time, it could backfire if the spares / service costs are not competitive with respect to the competition. I for one would love to own a Skoda, but will stay away because of the spare costs.

If they want to charge a premium for spares / service, they better make bloody reliable components too. The best way is to provide a good 1L warranty on non wear & tear parts.

[Hudson]

Originally Posted by Mpower

it will attract a whole new breed of buyers who aspired for Skoda

My Manza is now 3 years old & I have been eying the Laura 1.8 TSI since 2010.

Hopefully the competitive pricing and a new launch(if there is one) will make me go for it.

[lapsi]

Originally Posted by avira_tk

Skoda enjoys a premium tag because they entered the market with the Octavia...

... when VW was not there in the Indian market, hence the story of the one-eyed king.

Originally Posted by avira_tk

Indians are smart to see the that VW offers nothing better in their cars... ...the customers called their bluff.

The same needs to be done with Skoda. The customers should call their bluff and treat it as the entry level European brand that it is.

Originally Posted by avira_tk

VW current strategy will ruin an existing brand, just to massage their egos.

The strategy is simply to align their brands in accordance with their international standing. I do not think ego has anything to do with it.

And if this repositioning means reducing prices which results in higher sales, then their goal would have been achieved.

Originally Posted by vb-san

An entry level car in one country maybe a luxury offering in another.

Agree, but buyers should be aware of the entry level status of the brand in the country of origin.

Originally Posted by vb-san

But yes, both the brands' models are a bit overpriced in India.

And that is why Skoda needs to lower prices since there is no scope for VW for increase theirs.