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Skoda holding back investments in the Indian market

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Skoda is holding back investments in the Indian market

The Czech manufacturer Skoda recently launched the new Skoda Rapid in the Indian market. This updated version of this mid-size sedan is priced between Rs 7.22 lakh to Rs 10.97 lakh ex-showroom Delhi. With this new model, Skoda India is experimenting to bring down the production cost for future models. The updated Skoda Rapid is also offered with a DSG automatic box which makes it one of the very few cars in this segment to come with this option. Just before this, the parent company Volkswagen launched the Vento with similar engine and gearbox options on offer. The Rapid is based on the same platform as the Vento and shares a large number of components with it.

However, Skoda Auto India also said that it is holding back its future investments in the Indian market due to uncertainties regarding the policy framework in India. There have been many issues in the past that have added to the doubts of the Czech manufacturer. Mr. Sudhir Rao, Chairman and Managing Director, Skoda Auto India mentioned various issues in the past that have affected the plans of various global automobile manufacturers. Some of these include the technology transfer agreement and the fines recently imposed by CCI on various manufacturers.

The points mentioned by Mr. Rao are very clear and justified. These uncertainties prevent many major players from investing without worries in the market. They want the rules of the game to be clear so that they can plan accordingly as they move ahead. Skoda has been planning to introduce a car to replace the Skoda Fabia but the plan doesn’t seem to be going anywhere anytime soon. The Czech car maker has refrained from investing heavily in the Fabia replacement project. The new small car project has taken the back seat, all thanks to the bunch of issues mentioned above. Instead of that, Skoda India is working on other aspects.

Apart from the updated Skoda Rapid, the car maker also launched the Yeti facelift recently. The facelift to this sturdy SUV was showcased earlier this year at the 2014 Auto Expo. It is a very capable SUV which packs in a lot of features to cater to a wide range of buyers and has been a success in many markets. But in India it wasn’t able to sell in impressive numbers. Skoda Auto India also sells the Superb to cater the luxury car market in India. The car maker also reintroduced the Octavia in an updated form to take the place left vacant by the Laura. So far Skoda has invested around 750 million Euros in the Indian market.

The current government is trying to turn things around by promoting local manufacturing for various global brands. This would help manufacturers cut down on their costs as manufacturing is relatively affordable in India and also create more employment opportunities here. This would also increase the exports from India. Many manufacturers are already doing this to bring down their production costs. Even models that are not sold in Indian market are being manufactured here. To take the concept even further, the Prime Minister recently launched the “Make in India” campaign.