Skoda Auto open to a 'true partnership' to bolster its growth in India

After over two decades in the Indian automobile market, Czech brand Skoda Auto is now open to finding a local partner to leverage its market proximity and expertise in procurement and sourcing.

CEO Klaus Zellmer said that at this point, both standalone operations and a local partnership are open options. "One option is the standalone option. I also believe in a scenario where we find a partner in India to be more in tune with society and customers. We're currently discussing with a lot of partners and have to very carefully choose the right one," he said. 

He believes that a 'true partnership' combined with Skoda's engineering can be a winning combination in the Indian market. "We believe in skin in the game in terms of engineering competence, sales competence and procurement competence. It has to be on an eye level for both partners," he adds.

Finding the right partner could help Skoda Auto launch quality products at the right price, a feat that the company has struggled to achieve in the last 20 years. The company, which currently retails the Kushaq and Kodiaq SUVs along with the Slavia and Superb sedans, accounted for 1.19% of India's over 4-million-units passenger vehicle market in 2023, according to auto intelligence firm JATO Dynamics. The company is targeting a 5% market share by 2030 and Zellmer believes that its upcoming line-up of electric vehicles (EVs) and SUVs could help it grow in the market. 

Skoda is targeting a 5% market share in India by 2030 and Zellmer believes that its upcoming line-up of EVs and SUVs could help it grow in the market.

Bullish on India
The Volkswagen Group already has a relationship with Mahindra & Mahindra to supply EV components for the Indian carmaker’s upcoming INGLO-based EVs and it would make business sense to deepen this relationship further to share costs and technology in developing a low-cost EV. The VW Group is building three giga factories in Germany, China, and Spain. The company's potential partner in India could gain from the Volkswagen Group's expertise in battery cell manufacturing. 

The company's future investment in the Indian market will depend on what route it will take in terms of a future partnership. Sources close to the company said that in the off-chance that they don't find a partner in India, the Group is still willing to invest in the market. 

For now, Zellmer is on an ambitious path of launching a battery electric vehicle (BEV) by 2027-28. "We'll have to look at BEV at some point of time now that subsidy programs are also available. That's a new growth potential. We're there for consumers to make their decision based on our best offer," he said. 

Hybrids, too, are not off the table for Skoda Auto. "We've begun to see in Europe and China that having something in between a BEV and ICE is something consumers actually prefer at this point of time. In our lineup, the Kodiaq and the Superb come in with a plug-in hybrid and an e-range that's higher than 100 kilometres," he said. 

The challenge, he adds, with plug-in hybrids is the cost factor. "In a cost-sensitive country it's more advisable to look at mild hybrids and strong hybrids and plug-in hybrids can maybe come in the upper segment," he added. 

He adds that apart from the upcoming sub-4-metre compact SUV, the company will continue to consider other models for Indian consumers, including intensively testing the popular all-electric Enyaq in the country. "EV penetration in India is expected to grow to between 15%-30%, and our global strategy is to offer customers the 'best of both worlds' with their choice of electric-or highly efficient combustion powertrains," he concluded.