India Will Emerge A Global Manufacturing Hub For Select Skoda Models, Says Its Brand Chief

Skoda has been present in Kolkata for nearly 30 years now. But this happens to be his maiden visit to the city, notwithstanding the fact that he always wanted to come here, because Skoda’s legacy here is much older. Way back in 1934, four Skoda Popular vehicles with 15-kilowatt engine, completed a long-distance trip from Prague to Calcutta (now Kolkata) and back, covering over 15,000 km. This journey was part of an advertising campaign for the Škoda Popular. The trip, which took place from May 12 to September 10, 1934, involved four Skoda Popular cars. The journey served as a publicity stunt, demonstrating the reliability and durability of the Škoda Popular. The successful trip significantly boosted Škoda's exports to India, with India becoming the seventh largest export market for Skoda in 1938.

Speaking to Bizz Buzz, Petr Janeba, Skoda India Brand Director (Skoda Auto Volkswagen India Private Limited), delves at length on the Indian automobile sector, especially the EV segment, Skoda’s plans and strategies

How do you see Indian automobile sector performing or evolving over the years?

It's a good question. Actually, the auto market in India has been doing well for quite some time now. The market has been growing. Indian auto market was noticed by global players and everybody long time ago. But I would say that the most remarkable development came up in 2023, when India actually emerged as a number three market in the world automobile market, overtaking Japan. However, there is way to go, to move up from here and at least be number two, because, China is there with a market size of nearly 2.2 crore, followed by the US with a market size of 1.5 crore. India is at 43 lakh. So, there is still way to go.

There are certain concerns. Since last two-three years, or let’s say, since the Covid. The growth has been slowing every year. There is still a growth like 2-3 per cent, which we see as all OEMs for 2025. However, as I understand, there is a huge EV offerings coming, these numbers can change considerably. Last year hundred thousand cars were sold, which was two and a half per cent of the overall size. My rough estimate would be that 90 per cent of this EV market was dominated by the Tatas. They had developed this market with affordable cars. Now everybody is expecting or waiting for the pricings of the EVs. A lot will depend on that. Now with Hyundai, Mahindra having rolled out their EV models, everybody expects that this segment will at least double or treble.

So, will it be EV, and EV all the way?

If this is going to happen, then, actually the combustion segment and combustion engine segment, which has already been de-growing for the first time since COVID, may go down further. And this is a little bit alarming, because all the manufacturers have lined up plans for their capacity ramp ups. They have lined up their investment plans, they have done their upcoming models’ planning. Actually, we have started with Skyler. And we have the fastest, production ramp up plans ever.

What are your plans in this regard?

I mean, in January, we produced thousand cars. In February, 4 thousand, in March, nearly 7,000. And now in April, we will have top capacity-- eight and a half thousand cars. In order to catch up with deliveries or waiting customers because we have around 25,000 customers and so far, delivered only eight thousand, so 17,000 cars are still to be delivered.

But we will catch it up by May. But it is not so much growing. The sub-four meter SUV segment was the biggest and the most aspirational. Till last year, this was the fastest growing segment, and this year, it is not that anymore.

So, what according to you, needs to be done to push EV segment?

In so far as Skoda is concerned, three things are most important, which need to be improved in order that the EV can grow faster. One: the number of charging stations is one of them. And it's not charging availability only, but it's the supply of the energy, in general, because in some smaller pockets, you still don't know whether the supply of the of the utilities will be always there. The electricity power is not sustainable.

The second thing is price. So even with the 5 per cent GST, we are still not on a parity with the ICE vehicles. So, it will still take some time. So, government have invested a lot by giving 5 per cent GST.

Mind you that you cannot go below 5 per cent GST. What you can do, and this is what now, they are trying to do is to decrease at least the customs duties. So this would be something for store up. So, we are preparing a local deeply localized manufactured car, like Kushak, Slavia, and Kylaq are in our Pune factory. So there will be a new EV factory, and we will definitely bring a completely new EV, which will be 50 per cent for domestic market and 50 per cent for export.

But it will only come with the cafe three norms in 2028 (CAFE 3 refers to the next phase of Corporate Average Fuel Efficiency norms in India, which are stricter than the current CAFE 2 norms. CAFE 3 aims to reduce carbon dioxide (CO2) emissions from new cars to 91.7 g/km, moving towards a goal of 70 g/km with CAFE 4. This will be achieved through a combination of technological advancements and increased sales of electric vehicles.). It is not now. Now we can only import our European EVs, but for them, it's still 70 per cent customs duty. So we now wait for this Tesla story or the government support story to unfold. I don't think the EV segment will grow up so fast.

Would you like to bring EVs as CBU (completely built units) or semi-knocked down (SKD)?

It's better to bring them as CBUs but with a different customs duty that we can be competitive. We are waiting for the final decision of the government. But if there is some support coming, then we will start with the CBU. So CBU is like roll-on, fully built unit from Europe with reduced customs duties.

Once we start manufacturing deeply localized car, it will be like 4.5 meter SUV, EV. Then prices of EVs will come down significantly, also.

I think some increase in price on combustion engine, will happen, and this will further limit potential growth. So coming back to your question about automotive, it will still be a very hard fight for every single customer.

So, are you satisfied over the way EV adoption taking place in India?

I think it's not about whether I'm satisfied or not. It's about the government authorities planning something for a good reason. Why India should spend money on buying oil if India can be more independent. But this is now not happening.

The EV adoption will take time because technology is not yet matured enough, nor the infrastructure. People will still have a kind of, this range anxiety because with a normal car, you know, you can take petrol very fast anywhere. If it's an EV. Are you sure you're going to get a charging station or not?

It's not only about charging infrastructure. It's about the range you can go, as well. So the technology needs to grow, the charging infrastructure needs to grow, and the prices needs to go down. And after that, the adoption will be faster. And it will take some time. It may take 8-10 years to achieve the target.

How much of total or overall automobile market you want the EV segment to be in India?

I don’t know. Skoda is not the market creators. We are followers. The point is: people want an EV, we don't have an EV. If it is 30 per cent of the market or 50 per cent of the market or 70 per cent--we don't know. We have both cars. We have EVs, we have ICE, we have plug-in-hybrids, we can have full hybrids, but we need to localize them. It's only about what the customer wants and what the government pushes for. we and We are mainly European manufacturer. So, if we are ready for Europe, we will be ready for India now. The question is when and how.

Interestingly, we have a development centre in China where the EVs are the biggest ones. We have development centre in Europe and we have one even in the US. And we have even the technical centre here in India. We have 700 developers here in Pune. But they mostly take care of and deals with software solutions. They don't do so much about hardware.

Is India eventually coming up as kind of global manufacturing hub for you?

Slavia and Kushaq, Kylaq will start to export in September, and the new EV is also under our export policy. Yes. For these three cars, it will be like global manufacturing hub. We have two global manufacturing companies.

Currently the new Kodiaq second generation production started in March, and the Kodiak will go on sale in India on May 2. The booking will start on April 17. So, this month itself. So, when it comes to our own target that we have set up for ourself, we are well on target and exactly how we want it.