Skoda India is stuck in a rut. While its parent Volkswagen has redeemed its Indian operations with a strong export focus, Skoda continues to put its eggs in a single basket, India. As things stand, Volkswagen sells more than thrice as much as Skoda in India despite entering the market much later than the Czech car brand.
For instance, in the first 7 months of this year, Skoda clocked about 8,888 units. In the same period last year, the car maker sold 8,510 units. This is not even a 5 % increase, year-on-year. Volkswagen sold over 27,500 cars over the last 7 months in India, more than three times as much as Skoda. And then there’s the exports.
Did you know that the made-in-India Vento is one of the best sellers in Mexico.
What’s stopping Skoda despite having more cars to sell than say a Volkswagen?
1. The Rapid is a badge engineered vehicle, which is destined to do badly in a market such as India, where the badge engineering strategy has seldom worked.
2. The Skoda Superb is due for a full model change. The Octavia hasn’t really performed to its potential, and sits in a segment where growth is scarce. The Yeti remains a market dud, and is likely to remain so until a major price correction happens. The takeaway? Hot sellers are simply absent.
3. The automaker is stuck with a poor after sales service image, and cost of spares remain high.
4. Skoda does not have a single mass market hatchback to bring it the big numbers, like say a Polo for Volkswagen.
So, where does this leave Skoda?
With the Fabia, a car that’s no longer sold in India but whose next generation model has been around in Europe for more than a year now. Skoda India has now realized that it can’t really survive as a premium brand here, even as its cars continue to be positioned slightly lower than those of Volkswagen’s in India.
Alarmed at the numbers it’s doing in the Indian market, the Czech automaker is planning to relaunch the Fabia in India. The car could be here sometime in 2016. But can the Fabia rescue Skoda in India? Here are five ways in which it can.
1. Skoda needs to price the Fabia very competitively. For now, the general impression coming out of Aurangabad suggests that Skoda is looking to take a premium pricing approach for the new Fabia, a strategy that see the hatchback challenging the likes of the Hyundai i20 Elite, the Maruti Baleno and the Honda Jazz. Don’t do it, Skoda. Instead, push the car lower, and position it against the Swift. Leverage the size and build of the car against lesser competition, at a price tag that’s very competitive. Give more for less.
2. Have a wide range of variants. Skoda needs to do a Volkswagen with the Fabia. Like the Polo has a slew of variants catering to every buyer in the premium hatchback segment, the Fabia needs to be variant heavy. Trying not to cannibalize Polo sales by having a small choice of variants will only hit the Fabia hard. Either play hard or get out, should be Skoda’s mantra with the new Fabia. From engines to transmissions and features, the Fabia needs to match and better the Polo, and at a lower price point to boot.
3. Bet big on localization. A high amount of Localization means a competitive price tag. This also means lower costs over the ownership cycle of the car. Every car maker who has tasted success in India has first got the localization strategy right. If the Skoda Fabia is affordably priced, and is reasonable to maintain, why won’t the car buyer opt for a solidly built car? Make buyers ask themselves these questions.
4. Do a Ford with after sales service. Ford wasn’t really known for its after sales service, and low maintenance costs of its cars. Now though, the child parts strategy has seen the total cost of ownership for newer Fords such as the Figo, Ecosport and the Figo Aspire matching that of Maruti Suzuki’s car models. Now, if Skoda can pull off a similar job with the Fabia, why can’t the hatchback do a Figo for Skoda?
5. Finally, improve after sales service. Perception changes over time, but Skoda doesn’t have that luxury in a hugely competitive market such as India. After sales service remains an area of concern. And the sooner Skoda delivers on its promise of improving this area to match the best in the industry, the better it will be for the long time survival of the brand in India.
5 Strengths of the new Fabia
The new Skoda Fabia is built on the PQ25 platform, which is already used on many cars such as the Rapid, the Volkswagen Polo and Vento. Same platform means lower costs.
The new Fabia shares its engines with the Polo. This means more power and torque, across both petrol and diesel.
The new car is about 17 % more fuel efficient than the older version. Kitna deti hai, is a win.
The hatchback offers better interior room, is more stylish and gets a capacious 330 liter boot.
The new car gets more features than ever before, such as 6 airbags, Bluetooth telephony, cruise control and climate control.