Despite Slowdown, Skoda Invests Rs 8000 Crore in India, Lines up Series of New Launches

Quite contrary to the claims by the government, Skoda Auto India thinks that the passenger car market in India will remain fairly flat during 2020, as a direct consequence of the economic slowdown. The market may pick up from 2021. This notwithstanding, the company is in the process of shelling out Rs 8000 crore in India to facilitate new launches, strengthen research and designing activities and increase localization. Unlike the union finance minister Nirmala Sitharaman, the topbrass of the automaker feels that cab aggregators will never take away markets of the carmakers as there will always be an aspirational value of owning a car.

Thanks to the economic slowdown that auto sales dipped as high as 20 per cent. At least that’s what Skoda Auto India topbrass feels. That’s not all. There is no immediate respite either. The passenger car market is likely to remain fairly flat throughout 2020 and is expected to pick up from 2021. Skoda Auto India’s own sales dropped from 17000 units in 2018 to 15,000 units in 2019.

However, these negative sentiments notwithstanding, the Czech automaker is in the process of shelling out nearly Rs 8000 crore in India to fund its ambitious roll-out plans, strengthen designing and engineering capacity, overhaul and ramp up a manufacturing facility and increase localization under India 2.0 initiative.

Zac Hollis, director (sales, service and marketing), Skoda Auto India Private Limited, said that talking about the auto industry, in general, sales were down upto 20 per cent across board for the last few months. Our sales in calendar 2019 will be lower at 15,000 units as compared to 17,000 in 2018. There were certain issues that had an adverse impact including the cyclical slowdown of the economy and maybe, the US-China trade war. Besides, banks are shying away from extending finances to some extent. In 2020 calendar year, sales are expected to remain ‘fairly flat’. Going by the indications so far, the market is expected to pick up in 2021.

He said that there had been some effects of the growth of cab aggregators’ business. But that’s very little. People, especially younger people still have huge aspirational values for owning a car.

The carmaker, meanwhile has lined up plans to roll out a mid-size SUV with 95 per cent localisation in 2021 under the India 2.0 initiative. The company is actually going to add a whole new range of cars in its portfolio under the India 2.0 project preview, which will be made in India, keeping the Indian consumers in mind. At present, it has 4 models on sale in India- Skoda Kodiaq, Skoda Superb, Skoda Octavia and Skoda Rapid. The company is also more than doubling its dealership network from 63 to  138 touchpoints by 2023. Skoda India, which currently has 25 small branches across the country, will take this number up to 70 branches to cater to the requirements of the smaller cities, said Hollis.

He said that the only way the auto industry can turn around is by bringing back the positive sentiments among the consumers, ensuring them that their jobs will be secured, their salaries will be secured, their future will be secured and also by rolling out excellent cars whose designs, engineering and other features are globally benchmarked.