Volkswagen India to merge all subsidiaries under single company

Source: Business Standard, Sept 30, 2019

Mumbai: If the Skoda range of cars was the first brand the Volkswagen Group saw winning the favour of customers in India when it first launched in 2001, it is making no mistake about using the same established benchmark to drive forward the company’s operations in the subcontinent for the future. Next month, three corporate entities run by the group will be subsumed under one new entity – Skoda Auto Volkswagen India Private Limited (SAVWIPL).

It will serve as the new streamlined corporation entity for the group that sells cars that include Audis, Porsches Volkswagens, and Lamborghinis. The three Indian subsidiaries being merged are Volkswagen India Private Ltd, Volkswagen Group Sales India Private Ltd and Skoda Auto India Private Ltd, according to sources.

The move comes as part of the company’s ongoing Skoda-led gameplay for the country, analysts say. All the individual brands will, however, retain their exclusive and independent profiles, dealers and management but work under the leadership of Gurpratap Boparai, the to-be managing director of SAVWIPL.

Officials with the company neither denied nor confirmed the development. Skoda India, which on Monday launched a rugged outdoor version of its SUV called the Kodiaq Scout, will also be expanding its distribution and sales point, says Zac Hollis director sales, service and marketing for Skoda India.

How have the last six months been for Skoda? Hollis says while growth has been impacted, sales have been similar to the previous year with 9,517 Skoda cars being sold between January and last month (August). Last year, the company (Skoda) sold around 17,000 cars.

The future will also see the company launch at least five cars to include refreshed models, variants and new cars altogether, Hollis adds, and says that they will include a mid-sized SUV, and a notch-back sedan. Those aware of developments also indicate that the crossover Skoda Karoq and the sporty Octavia RS will roll out.

As of now, the company gets the majority of its volumes from three models that operate in premium segments: compact sedan Rapid, premium sedan Octavia and the executive sedan Superb. Hollis adds that the company will also bring in additional models post 2021 which will include brand new cars like an SUV made expressly for India. Is Skoda not deterred by the current gloom in the auto sector? “This downturn is something that we see as a short-term phase,” he said.

Suraj Ghosh, principal analyst for IHS Markit Powertrain & Compliance Forecasting, says at one stage VW was actually contemplating quitting the Indian market but Skoda continued to perform well and its very apparent that, going ahead, it is Skoda which will lead the way in R&D, production and sales strategy.

“Most of the platforms are shared internally so that won’t be difficult to do but the challenge will be expanding Skoda’s reach beyond the National Capital Region region and Maharashtra to the Eastern parts of India and deeper in the South.”

Hollis says that the Skoda will expand dealer presence from the current 64 locations to 200 points by the year 2025. However, most of that expansion will happen after 2020.

Will the company bring back its hatchback the Fabia which it had launched around 2009 and garnered considerable success at the time in its segment, considering that its current top volume generator is the Rapid, a small sedan? Hollis only says, “We may look at a hatchback for the future.”

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