Days after confirming that Skoda Auto will indeed be spearheading the future planning of the Volkswagen Group in India, the company has now given out its plan outline. This includes heavy localisation, making products based on the MQB A0-IN platform and an investment of Rs 7,900 crore in the next few years.
We all know that Maruti, Hyundai and Ford have achieved success to a great extent here because most of their products carry heavy localisation. The more the amount of localisation, lesser are the taxes. It is as simple as that. For the Volkswagen group, none of their engines are cent per cent localised here. This is set to change. Skoda aims to have at least 90 per cent localisation for the entire family. This will help it achieve higher profits by virtue of being taxed lower. The challenge here will be to get materials to the exacting standards by the Volkswagen Group. Compromise on build quality or reliability is something which will not be tolerated in the name of localisation. Volkswagen’s Chakan plant will add another line for the new MQB-A0 IN products. Newer products from the family based on the versatile MQB-A0 IN will be built here.
Volkswagen’s acclaimed 1.0-litre TSI motor will be localised for the Indian market. At present, it is not being used in any of the VW or Skoda products in India. However, it is highly likely that this will be the engine of choice for the future new products from the group. This engine is available in a 115PS as well as a 95PS guise internationally. At present, Volkswagen has got the 1.0-litre motor in its three cylinder naturally aspirated form for the Polo. However, this motor is also imported from Poland and hence costs more than competing engines from other manufacturers.
Products based on MQB-A0 IN
Skoda’s global CEO Bernhard Maier did say that the first product based on the platform will be a SUV which will be built for the Indian market. He said that the company understands how lucrative the SUV segment is at the moment and also the fact that the group vehicles don’t have appropriate representation in the segment in India. Skoda will likely benchmark the new product against the highly successful Hyundai Creta. The new Skoda SUV will also be shared with Volkswagen and will be loosely based on the Vision X concept. Since the MQB-A0 IN can be used to build multiple vehicles, it is likely that the next-gen Skoda Fabia as well as the Polo\Rapid\Vento all will be made on this platform. While Volkswagen does have presence in the hatchback segment, Skoda doesn’t and this could be the right time to enter the market too. Skoda aims to have a SUV-strong portfolio for India and this will mean the Karoq and others will be headed our way. Maier said that the influx of CBUs will continue along with the domestically made products.
Expect all these vehicles to have a very competitive pricing when launched as well as some amount of electrification rolled in.
Skoda and Volkswagen cars have always suffered from not-so good service reviews. Customers have always claimed that spare parts as well as general service used to be very costly. To curb this sentiment, Skoda had introduced a service estimate calculator on their website. This app will show you the price of the service and one wouldn’t have to pay anything more than that. The turn around time for vehicle delivery too was improved vastly. Spare part prices too were reduced considerably. Localisation will help these to come down even further and be at par with its competitors.
Skoda says that they will invest Rs 7,900 crore in the Indian market for building the new vehicles and to set up an R&D centre in Pune. This facility is nearly ready and should be open by the end of this year. Skoda aims to employ around a 4,000 strong workforce here. The R&D centre will help the company have a faster response time to market changes. There is also the scope for further investment based on the market developments.
Maier says that they are ready whenever the Indian government is. He said that they have the infrastructure in place and it is but a matter of time before they bring it here. The aforementioned investment is not part of the electrification program and separate funds will be allotted for it.