The Czech brand Skoda is certainly making every effort possible to come out with a sustainable business model in the Indian auto market. With disappointing sales and stiff competition from its Asian rivals, the car maker has been working on reducing development costs for its vehicles, while also increasing localisation. With the next generation Fabia due for a global unveil later this year at the 2014 Paris Motor Show, the Indian arm is working on an all-new model that could be built on the Rapid platform.
Skoda India made it clear that the automaker is looking forward to be a key player in the “value for luxury” segment, rather than the mass volume space. The company’s immediate focus is on the Rapid and above models and its current process includes the execution of the product development strategy in which it will learn to lower costs and increase localisation, while retaining the Skoda quality.
While Skoda’s current levels of localization stand around 60 percent, the new Rapid sedan set to launch later this year will be based on Skoda’s current programme of developing products at a lower cost and will be highly localized. The new Rapid will be launched with the downsized 1.5-litre diesel engine (that will debut on the new Polo) along with a new transmission.
The next few months will be a stepping stone for Skoda India to realise positive results; and depending on the results of a profitable and sustainable model, the company will look into the sub-Rapid segment that lays empty after the Fabia was discontinued in 2013. A clear decision is expected to be made on the new compact model in the next 6-9 months, once the automaker would have clarity on its products. Even though being a volume player is not Skoda’s primary objective, the absence in the small car segment that constitutes 70 percent of the Indian passenger vehicle sales has surely pinched the automaker hard.
The next compact model is slated to be either a hatchback or a smaller sedan that will bring in the numbers. A compact sedan based on the Rapid could surely help the company gain volumes in the booming sub 4-metre sedan space. With the Fabia not on sale anymore, Skoda has excess capacity which could be used for new models in the small car segment. The company is also working on improving its customer service and after sales, which have been a huge sore point for several prospective buyers.
Skoda stated that despite the tough market conditions, the automaker reduced its losses for the previous financial year. The company sold 785 units of the Rapid in May this year, down from 1188 units in January this year. The company has also reduced its dealerships from 100 last year to 85, with presence in 65 cities across the country. Apart from the new Rapid, Skoda will also launch the 2014 Yeti SUV facelift around August-September this year.
