Page 54 - Forbes - India (January 2020)

Enterprise

Madhu Kapparath
“The group had a serious identity
crisis,” says Deepesh Rathore,
co-founder of Gurugram-based
automotive consultancy Emerging
Markets Automotive Advisors
(EMAA). “While Skoda was seen as
a cheaper brand in Europe, in India
it positioned itself as a luxury brand
and they managed to find limited
success.” But, with the arrival of
Volkswagen the Group struggled to
position it. “In Europe, Volkswagen
competes with Toyota, and in India
Skoda was already doing that,”
says Rathore. “That created a lot of
confusion and they didn’t know where
to place the Volkswagen brand.” Skoda’s Aurangabad plant (above) will have synergies with Volkswagen’s factory in Chakan, Pune
“Indian consumers give good
weightage to European brands,” says Last October the Group created given charge of the Middle East and
Puneet Gupta, associate director Skoda Auto Volkswagen India the Asia-Pacific region, while the
of Automotive Forecasting at IHS by merging Skoda Auto India, Volkswagen Group itself retained
Markit. “Skoda and Volkswagen did Volkswagen India and Volkswagen China, where it sells some 4.21 million
manage to create a great impact on Group Sales. “The plan is aligned with vehicles annually. Skoda was given the
their arrival in India, but were not able our strategy to re-enter the volume mandate for India and Russia. While
to sustain the momentum. There were segment in the country,” says Boparai. Volkswagen in Germany will be going
54 no new launches and replacements, Re-entering this segment is financially flat out on electrification, Boparai
and they failed to target the sub-4- critical for the Group, in addition to prefers to wait and watch. “Ours is
metre category, which could have re-establishing the brand that has lost going to be a top-down approach
emerged as a good volume churner.” sheen largely due to a poor portfolio with battery electric vehicles from
The Group also entirely missed and higher maintenance cost. Audi and Porsche, and then respond
the SUV bandwagon. “If the group to the other brands,” says Boparai.
could bring out a vehicle in the a new Structure Then there is the merger of various
Hyundai Creta or Maruti Suzuki Much of the restructuring to which units to streamline operations. Earlier,
Brezza segment, with plush interiors the parent company has committed the Group’s three arms worked
and mark it even 10 percent higher €1 billion (`8,000 crore) is in line independently: In Aurangabad,
than the competitors, they would with the Group’s experiments Skoda Auto India made the Octavia,
have a winner,” says Rathore. with new strategies. Under a 2018 Kodiaq and Superb, in addition to
Now, the company has opened plan, it distributed responsibility Volkswagen’s Passat and Tiguan,
a new technology centre in Pune for its subsidiaries in different and Audi; Volkswagen India’s
that will develop market-specific markets, where one brand assumed Pune plant made the Polo, Vento
vehicles. “The SUV segment is responsibility for a region. “This will and Rapid; the Volkswagen Group
booming across the world and not make it possible to take decisions in sales functioned as the sales and
just in India,” says Boparai. “People a decentralised way and the board marketing arm for Volkswagen,
like the high driving position and of management will be able to Audi, Porsche and Lamborghini in
the robust and safe feel of SUVs. concentrate on overarching strategic India. Now, even as the brands will
But we will not be limited to SUVs, topics. This will make Volkswagen maintain their identities, dealer
and are looking at the C segment faster, slimmer and more efficient,” network and customer experience
and maybe the upper B segment.” Herbert Diess, CEO of the Volkswagen initiatives, Boparai and the Skoda
The company will also be Group, had said at that time. brand will lead the common
focussing more on petrol in the While the Volkswagen brand strategy for the Indian market.
small car segment, moving away assumed responsibility for the “One of the reasons for this
from diesel. “In the smaller cars, Americas and Sub-Saharan region, merger is to have everyone pulling
the economics of diesel becomes SEAT got the mandate for North in the same direction. It also gives
extremely challenging,” says Boparai. Africa. Luxury carmaker Audi was us synergies of resources. When

forbes india • january 31, 2020