Skoda Auto has confirmed that it will take the lead in developing a low-cost ‘Eco’ platform for the VW Group to serve cost-sensitive markets like India.
The first models to be built on the Eco platform are due in 2020, with the initial one likely to be a five-seat, mid-size SUV to rival the Creta. Both VW and Skoda will individually develop their own SUVs but will share the powertrain and other mechanicals.
With VW’s EA189 1.5-litre diesel due to be phased out before 2020, VW will need a diesel engine which is critical for the success of any SUV. It’s likely that a pared-down version of VW’s EA288 2.0-litre diesel will be used, while it’s also possible that VW could outsource a compact diesel from another manufacturer altogether.
The next model is likely to be a mid-size sedan that could replace the VW Vento and Skoda Rapid, which are due for a model change in 2021. Moving further down the pyramid, Skoda will finally get into the hatchback segment it had vacated since it discontinued the Fabia in 2013. However, this won’t happen till 2022 by which time VW will finally replace the Polo in India as well, but not before skipping the current generation (in Europe) altogether.
Hence, in the first phase of the product plan, VW and Skoda are expected to get three all-new models each. An SUV, a mid-size sedan and a premium hatchback.
Skoda is tight-lipped about volume projections but suppliers say they have been asked to quote for a production run between 1,80,000 and 4,00,000 units, a large chunk of which will go for exports.
INTERVIEW WITH Bernhard Maier, Chief Executive Officer, Skoda Auto
On the alliance with Tata Motors, re-engineering the MQB platform for India and the potential of the Indian market.
Why did the MoU for an alliance with Tata fall through?
We had good and constructive discussion with Tata Motors. Both parties concluded that the desired economic synergies could not be achieved. We at Skoda are now developing a new strategy based on the Volkswagen Group’s successful MQB A0 platform and are very confident about this approach for the Indian market. However, the possibility of future cooperation with Tata is not ruled out.
In the next five years, where do you see Skoda in India?
We have ambitious plans for Skoda in India and aim to strengthen our presence across segments. We just started in our Strategy 2025, the biggest product campaign ever in the history of Skoda, and we are strongly focusing on the SUV segment. These segments are by far the fastest growing segments in the entire world and this is true for India as well. So we are starting with the Kodiaq now and are looking forward to come up with some interesting new products in the years to come. We will also evaluate the Karoq for the Indian market.
India is one of the most promising economies with a dynamically evolving automotive industry, and this market will play an important role in Skoda’s global growth strategy. As part of our new strategy for the market, we are planning to re-enter to volume segments. Our goal is a market share of 5 percent in the Indian market after 2025.
How do you plan to reduce costs of the MQB platform for India?
One of the aspects we have to look at intensively is finding out how to lower the cost of technical development. In this regard, we are looking at establishing a local engineering centre in India. Additionally, we need to develop a solid supplier base in India, which will provide us with a cost advantage without compromising on quality. We will also have to tackle the issue of competitive material costs.
When can we expect the first models based on a localised MQB A0 platform for the Indian market and when can we see the first products?
The launch of the first products based on this strategy will coincide with the changing regulations in 2020 (shift to BS-VI). We are evaluating various volume segments and the compact SUV and hatchback segments look to be particularly exciting.
Will you be developing products for the VW Group and Volkswagen brand in India as well?
Our strategy is, of course, closely linked to the development of the VW Group in India. Therefore, we will also be considering sharing the platform with VW. However, each brand and product will have its own identity.
Will you be looking at exports from India?
First of all we need a stable footprint in India itself, but in the future we want to produce cars not just for the local market but also to export. Currently, we have our footprint in 102 international markets and we are planning to be in 120 markets by the end of the year 2025. So there are some markets that are good for cars produced in India.
Is the low cost structure of the Indian market a bit challenging?
When you talk about India, we are not only talking about the third biggest market in the world, we are also talking about the most competitive one when it comes to cost-sensitive products. This is a challenge which we are happy to take to see how competitive we can be.
Also read: 2017 Skoda Kodiaq India review, test drive