After twenty-four years in India, ŠKODA sees Kylaq as its most crucial launch to democratize European technology and establish itself as a serious contender in India’s car market.
09 Nov 2024 | 7111 Views | By Prerna Lidhoo and Radhika Dave
For over two decades, Czech car maker ŠKODA has navigated the complexities of the Indian automotive market, facing fierce competition and striving to find its niche. While ŠKODA's European roots give the brand a unique identity, adapting to local tastes has been a challenge.
This, says ŠKODA Board Member ...
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For over two decades, Czech car maker ŠKODA has navigated the complexities of the Indian automotive market, facing fierce competition and striving to find its niche. While ŠKODA's European roots give the brand a unique identity, adapting to local tastes has been a challenge.
This, says ŠKODA Board Member for Sales & Marketing Martin Jahn, is similar to perfecting a cake. "We have to keep what makes ŠKODA strong—the European technology, driveability, safety, good quality—and add the new things that the Indian customer expects like the modern design, connectivity features and so on."
According to him, ŠKODA's core attributes are like the base of the cake—essential and foundational. "Everything else is just on top—the next layer of the cake. You have the base of the cake and then you have the cherry on the cake. I think we have an excellent base, but we have to bring a bit more cherries. Still, in the end, you buy the cake for the base, not for the cherry."
As the company launches Kylaq, its carefully crafted sub-compact SUV, the question is: Will Indian consumers be impressed by the "cherries" that ŠKODA has added to its trusted base?
"With this launch, we're targeting the sub-four-metre SUV segment which has seen significant growth in India. This is in line with global trends…this segment accounts for about 30% of the overall SUV market. It gives us a golden opportunity to cater to customers seeking value and safety," said Piyush Arora, managing director (MD) & chief executive officer (CEO), ŠKODA Auto Volkswagen India. In addition to domestic sales, the Kylaq will also cater to international markets, including Mexico, South Africa, and West Asia.
With competitors such as the Maruti Suzuki Brezza, Tata Nexon, Hyundai Venue, and Kia Sonet already claiming their share of the sub-compact SUV segment, ŠKODA's challenge is clear– to prove that the Kylaq has a place in the fiercely competitive market.
"The landscape is extremely competitive. I still believe we can bring European technology, the drivability of the car, the driving comfort, the efficiency, and design. For quality and safety, too, I think we are on a very high level. So, this is our right to win – the whole package for the right price. There will also be an after-sales package included for early registrations. It's a myth that ŠKODA service is expensive. We need to change that (perception) and we believe we have a stake in the game," Jahn explains.
The company has set a sales target of 100,000 units by 2026. Klaus Zellmer, Chairman and CEO, ŠKODA AUTO believes that Kylaq could be the turnaround product for the company. "Kylaq is such an important addition to our new family of products. Europe is our key market. But the strategic focus for ŠKODA is expanding its global markets and India is our second pillar. Around 50% of our cars outside the Czech Republic are made in India," he said.
ŠKODA has always been seen as a premium brand in India. However, the sub-compact SUV segment demands a fine balance between features and affordability. Even though it's priced competitively at an entry level pricing of Rs 7,89,000, the Kylaq faces the challenge of overcoming deeply entrenched local players, many of which offer high-end features at accessible price points.
"Our mission is to democratise European technology on Indian roads. We entered India 24 years ago and Kylaq is a part of our biggest mission in India. It sets a new benchmark in the sub-4m segment. This is the biggest and the most competitive segment in India and will expand ŠKODA's footprint in India," Petr Janeba, Brand Director, ŠKODA Auto India said.
ŠKODA hopes the Kylaq will significantly expand its market reach, increasing the addressable audience from 27% to over 60%. "Knowing our current market share is around 1%, our ambition should not be lower than 3%; tripling the market share within a year," Janeba said.
The Kylaq's success will likely depend on how well ŠKODA addresses the long-standing concerns around after-sales service. Janeba said that the company is increasing its footprint from 260 to 350 touchpoints by the next year. "This will also increase our addressable market from 20% to 60%. The after-sales and customer experience are aspects that the company is very very hard on," he added.
However, the company has plans beyond increasing sales. ŠKODA aims to make India both a growth market and an export hub for its vehicles, with plans to use the country as a production base for models like the Kushaq and Slavia, expanding exports to markets in Asia, Africa, and beyond.
ŠKODA's strategy is rooted in deep localisation, both in terms of production and design. The Pune facility serves as a main production base, with a focus on using as many locally sourced components as possible to control costs and cater to local preferences. This localised approach allows ŠKODA to meet the cost expectations of Indian consumers while maintaining its European standards for quality and safety. Beyond production, ŠKODA is tailoring its designs to appeal specifically to Indian aesthetics, which lean towards more expressive, modern features. According to Jahn, "The Indian customer doesn't just want the cheapest car; he wants good design, modern features, and safety. The Kylaq captures these expectations."
With its enhanced portfolio and localised design, ŠKODA's future in India is aimed at reaching one lakh annual unit sales by 2026. If the market responds favourably to the Kylaq and other upcoming models, this milestone could arrive sooner, Janeba says.
Looking Ahead
Beyond the Kylaq, the company is actively working on an electric vehicle (EV) strategy tailored to the Indian market. While a fully localised EV is expected to be produced in Pune only by 2027, ŠKODA plans to introduce European EV models in India as early as next year to gauge customer interest. "We are also now considering what kind of electric vehicle to bring. We are sure that we'll bring an electric car to India," Jahn said.
Janeba feels that the government's targets of 30% EV penetration by 2030 are "too high". "We will be happy if it is 15 to 17%. But with all the new models of the competitors in the pipeline, ŠKODA, too, will bring EVs next year. We are preparing for a full, deeply localized EV from Pune in 2027 and need European cars to come next year. We would like to come to the market when the situation stabilises," he said.
In the future, we also need to bring hybrid technology, Jahn points out. "We see that the interest and popularity of hybrids is growing across the world. So now I think we will need hybrid technology for India as well," Jahn adds. He emphasises the importance of hybrid technology as only a transitional solution: "Hybridization—whether mild, regular, or plug-in—is a middle way."
Jahn sees India as a uniquely positioned market that requires its own path in e-mobility and hybrid adoption. "I think India will have to find its own way. I don't think it can copy either China or Europe or the US. India is a very specific emerging country with growing power," he says.