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Old 5th November 2012, 21:13   #1
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Arrow VW to Reposition Skoda Brand in India

Seems like the VW honchos have finally woken up!

Skoda- a brand standing for VFM quality cars(and not so premium) all over the world has unintentionally become too Premium in India. This can be seen in terms of prices of its products and its perceived values in the minds of the people here.

While this should spell success for a company, this is actually proving to be a problem for its mother company Volkswagen. This premium positioning of Skoda has been spelling Hell for VW.

You see, Skoda is supposed to be at the bottom rung of the VW group with Audi topping it with its high tech and Luxury. VW brand has to step in between that.
But unfortunately in India, there isn't much of a room in between the two.
VW and Skoda are strong competitors here and there isn't a lot to differentiate between the two.

Now VW is planning to reposition the SKoda brand in India.
(Read: Make it less expensive)

News has it that extensive localisation would be their main weapon in this game. But hey, if it spells lower prices who complains? You can always have the over-engineered VW at the same ol' prices.

But they do need to do something about the A.S.S. Its clearly pathetic but the new Skoda MD seems to care about it, so hopefully it will get resolved.

What ever it is, one thing is for sure, the Customer would be the final winner here as he would get more variety at all price points.

Source: Economic Times
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Old 5th November 2012, 23:06   #2
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Default Re: VW to Reposition Skoda Brand in India

General Motors had exactly the same in mind due to which they withdrew Opel and introduced Chevrolet. As a result Opel was 'designed' to lose and Chevrolet 'destined' to lose! VW will do the same to Skoda. Both the cars aren't moving off the shelf as well as they ought to have after so many years in India and this will simply dig a grave for them! Skoda has a huge snob value in the Indian psyche. Why not let the 2 brands switch positions in India & let Skoda command a premium. No doubt, in reality inside the skin both cars are the same and the service culture in no different, albeit Skoda has a more notorious perception!
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Old 5th November 2012, 23:33   #3
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Default Re: VW to Reposition Skoda Brand in India

Finally some action at Skoda, this was long overdue. Someone needs to kick them out of their stupor to do something about their service levels, poor reputation, pricing and get volumes moving. No point having premium brands if you get no numbers.

As we have seen from the Duster and XUV, the problem is not so much price but value, both those cars are doing crazy numbers at pretty hefty prices.

With increasing competition and options this was needed to get VW group volumes. Having 3 'premium' brands makes no sense.
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Old 5th November 2012, 23:44   #4
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Default Re: VW to Reposition Skoda Brand in India

I'm hearing a lot of good things about this new MD at Skoda. I'm sure he has after sales on his mind, because thats the only real complaint people have against Skodas. Here's hoping a new top-down approach to customer satisfaction is brought in at Skoda!

A lower price along with maruti-esque customer service focus will make this an unbeatable brand.

Although its not just the pricing - even the products are so similar! I cant tell the Rapid and the Vento apart from a distance. It's *exactly* the same car!

I understand badge engineering - and how the old Passat, old Superb and old A4 were practically the same car -- but they looked quite different, and felt VERY different from each other on the inside. Unlike the Vento and the Rapid.
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Old 6th November 2012, 00:06   #5
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Default Re: VW to Reposition Skoda Brand in India

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. If I were them, and needed to go downmarket, I'd rebadge them SEAT's or something. It's hard to create a premium image - just look at tata and maruti trying so hard. And these guys just want to throw it away :P
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Old 6th November 2012, 04:24   #6
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Default Re: VW to Reposition Skoda Brand in India

I Agree with the posts above. It makes no sense to diminish the brand name into a less premium. Skoda has occupied an unexpected premium brand name in India. Why not live with it and look at improving service instead. After all, service can also be a differentiator.
If anything, the scary after sales is the key to improve the image and not re-position it as a less premium brand. The Coke-Thums-up analogy above is spot on.
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Old 6th November 2012, 04:58   #7
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Default Re: VW to Reposition Skoda Brand in India

It seems to me that the simpler solution would be to pull VW out of the market. More pertinently, they should never have come in.

Given the present scenario, I would guess downgrading the skoda comes with it's own set of risks. At present people perceive it as an upmarket brand. Pull that out and you might wind up with a lot of P.O'd present customers who will bad mouth your product. Never a good thing.

Smarter perhaps may have been to attempt product segmentation. Not easy because VAG would rather cannibalize their own products than let others cannibalize them.

Smartest of all would have been to nip this in the bud when skoda first came in. Obviously no foresight was shown. Unless at that point VW had nonintention of entering the Indian market, which is doubtful.
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Old 6th November 2012, 05:16   #8
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Default Re: VW to Reposition Skoda Brand in India

I am not very sure how this will help VW as a whole. No one will buy a cheap car if its reliability is questionable. As soon as they bring the price down they need to compete against the Marutis and Hyundais of the world which are far far ahead in terms of reliability and A.S.S.

Unless VW fixes that first, playing with price would be a non starter.
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Old 6th November 2012, 06:29   #9
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Default Re: VW to Reposition Skoda Brand in India

Certainly Skoda is over hyped in India. But again, lowering the standards without improving A.S.S, is like killing Skoda completely out of India. Hope thats what VW wants to do.

VW as a parent company should ensure success of child companies in any segment of market. Since Skoda already has brand name in India, both VW and Skoda can work together on better A.S.S.
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Old 6th November 2012, 08:07   #10
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Default Re: VW to Reposition Skoda Brand in India

Skoda making VW wet their pants ?
Serves VW right if you ask me !!
Bought the L&K just 4 months back and a relative was aiming for the Jetta a little before that so i have both sides of the stories. I vividly remember Skoda A.S.S was without doubt the one with the most notorious reputation for quite a few years and that too by a long shot when compared to anyone else......all that until VW walked in. Initially when they were just selling the Passat and Beetle their A.S.S was almost non-existant as they were hardly getting in any numbers & suddenly things changed with the Polo/Vento & how !
Not only was VW A.S.S in the limelight now but they also decided to skip the initial part where they 'pretend' to be so good and caring to get in the customers and then slowly turn towards complacency. NO ! not them..they directly skipped to being complacent and not give 2 hoots about a customer's issues. Ajmat's Jetta scene is a perfect example off late.
Anyway coming back, right from my buying experience to ownership experience so far (6500km in ~4months) everything has been absolutely flawless. There have been times when i had to initially make trips to the dealership for paperwork etc and on every occasion Autobahn have been prompt. I am actually starting to believe they are on the path towards improvement and are sprinting. Give them a chance !
Now VW downtown Mumbai - The experience was brief but decisive!
The same relative who was gunning for the Jetta highline and me walk into the dealership. Its overflowing with people enquiring about the Polo and Vento.
We simply walk up to 3 different sales execs. on 3 separate occasions and we directly tell them - " We want to BOOK the Jetta highline NOW" ( we really did )
All 3 occasions - "Yes sir, excuse me"
They even did that to a handful of other Passat/Jetta owners !
We went ahead, booked the Cruze and he couldnt be happier today !
Point is, the reason why VW are resorting to such re-positioning hogwash is clear. Skoda are just better !! VW wouldnt need to do all this if they just fine-tuned everything they have going on !! The sales would come in anyway !
My 2 cents
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Old 6th November 2012, 09:24   #11
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Smile Re: VW to Reposition Skoda Brand in India

I honestly don't know what they are thinking, making a public statement like that will ensure that nobody in their right minds will look at Skoda again.

Indian market likes VFM and not cheap or low brand positioning, look at what happened to the nano.

Right now Skoda does a better job than VW at both service and sales quality,
and they are actively trying to sabotage their own brand.

Personally I hope the service level's don't drop as I just bought a Rapid.

Aren't there some anti competitive rules that prevent them doing this ?

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Old 6th November 2012, 09:25   #12
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Default Re: VW to Reposition Skoda Brand in India

Skoda internationally stands for good value and generally strong cars.
So does VW incidentally, all over the world, except possibly here.

Yes it is true that VW is priced higher than Skoda and pitched as being more premium. However, this is not strictly true, car for car.

I dont think that bringing Skoda down in the positioning ladder is going to help matters much.

If one harks back to 2006-2007 itself, Skoda had done a few things to its Laura vis a vis the Jetta and the Superb vis a vis the Passat in 2009, in order to create a greater distance between the two brands.

The fact is that Skoda have been around for 10 years now and the quality seeking Indian consumer definitely takes a serious look at them as a brand, before deciding on which brand he or she wants to go for.

Perhaps as someone said, they need to consider bringing in the SEAT to India to play in the "real value" segment and give some stiff competition to the Hyundais, Toyotas and Suzukis of the world.

One thing is true - the Europeans and the Americans in some sense lead the way in terms of thought and establishing standards and expectations. Then the South East Asians just land up and take the execution towards commercialization and monetization to the next level entirely...
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Old 6th November 2012, 09:35   #13
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Post Re: VW to Reposition Skoda Brand in India

Agree with Greenhorn. Skoda is, at times, giving tough competetion to VW and I wonder if this is one of the reasons why VW would want to 'down-grade' them.

Skoda stands for build quality. At least my 2008 Nov manufactured Fabia is built tough as hell. What I hope VW won't do, in an attempt to down-grade Skoda car's price and appeal, is reduce the quality of it's parts and overall vehicle. That would mean killing the brand and throwing away the image it has earned, of making good quality cars [not speaking of A.S.S, just car's quality].
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Old 6th November 2012, 09:48   #14
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Pricing the car higher or lower does not really make it premium, nor does weird advertisements. Kill an already established premium brand to make to space for a parent brand, just after announcing no fresh investments and blaming policies etc just does not feel like the right strategy to me.

Instead they should try to exercise some control over dealers and stop supporting dealers blindly over customers(both VW and Skoda).

EDIT: My biggest fear is toned down next generation Skoda cars, especially the Octavia 3 and Superb next gen.

Last edited by .anshuman : 6th November 2012 at 12:39.
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Old 6th November 2012, 10:05   #15
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Default Re: VW to Reposition Skoda Brand in India

Skoda is already less cheaper than VW in India, though marginally. Internationally too the difference is small. People were in awe in Europe and pleasantly surprised when they saw a brand like Skoda bringing cars like Superb, Yeti and Octavia II in the market. Skoda was never a premium brand there. It was a working man's car in Europe. But perception changed when they hid the logos and asked people to have a feel inside out and asked which brand car was it and most people mistook it for a BMW. The build quality at that price point was damn good and still is.

Hope VW realises that and though they may price Skoda lower in the future, I hope they don't tamper with its build quality. And seriously does something to inspire more confidence from its own and Skoda's ASC's.

Last edited by dkaile : 6th November 2012 at 10:07.
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