Page 55 - Forbes - India (January 2020)

auto

manufacturing and sales are part of deal with relatively higher costs for India, the platform has better
the same organisation, it gives you because half their components emission and fuel consumption
far more reactivity and speed to were imported. In comparison, norms, in addition to better safety,
react to the market,” says Boparai. Hyundai Motors built an ecosystem comfort and infotainment systems.
Already, the Volkswagen arm plans of suppliers in India, which brought “While the platforms and
to achieve a 3 percent market share it remarkable economies of scale. dimensions of the new products will
in the next five years. “Volkswagen “Skoda started very well. It be the same, the body style and design
is developing modern and cost- positioned itself very well,” says language will be distinct for Skoda
effective retail models called ‘pop- Boparai. “For the segments apart Auto and Volkswagen,” Boparai adds.
up and city stores’ for tier 2 and from Fabia and Rapid, because they “The segments served by each of our
3 markets,” says Steffen Knapp, are low volume, the localisation isn’t brands appeal to a distinct audience.”
director, Volkswagen Passenger Cars very high. And when you don’t have “If they can find success with
India. “Not only will it increase the localisation, prices are high. The one model, then the dealers will
brands’ accessibility and visibility, it other thing we suffered from is patchy begin to line up,” says Rathore of
will also be an effective and profitable services, and expensive spares.” EMAA. “By streamlining operations
sales tool for our investors.” The company wants to cut costs and localisation, they will save
Audi’s plans include the launch of by standardising components millions. That means if they can
new vehicles through 2020. “While and production processes. “The bring out a vehicle that retains its
we follow our brand strategy, we will localisation percentage will be higher, build quality at a competitive price,
also reap the benefits of being part of which will help us address the total they have a winner in hand.”
SAVI,” says Balbir Singh Dhillon, head cost of ownership,” explains Boparai.
of Audi India. “Not only do we achieve For the past two years, the company will it work?
internal synergies in manufacturing, has managed to bring the share of As the Group gears up to capture 5
percent of the market in the next
five years, it won’t be a smooth ride.
Sales record “It all depends on the competitive 55
environment,” says Gupta of IHS
company 2014-15 2015-16 2016-17 2017-18 2018-19
Markit. “The Chinese players are
Skoda Auto India Pvt Ltd 15,003 15,368 13,712 17,387 16,521 making their entry and there are
Volkswagen India Pvt Ltd 45,018 41,096 50,042 45,329 34,859 companies such as Kia that are
Source SIaM becoming very competitive. To take
away market share from them won’t
personnel expertise and back-office localisation to about 82 percent, be easy. But 5 percent certainly
operations, but also find common much of it made possible by the looks achievable, especially since
dealer partners and better sourcing.” progress made by local suppliers who the Group has a reputation for
Volkswagen’s gamble comes at now meet the required standards. building good quality vehicles.”
a time when the Indian automobile “Higher localised contents will help in Others agree that with the brand
industry is in the doldrums. An overall bolstering the domestic supply chain, reputation the German group has
slowdown in the economy, alongside agile need-based customisation, and garnered over the years, the India 2.0
a liquidity crunch and uncertainties faster service response,” says Boparai. plan could work for it. “If they can
over the transition to stricter emission The new platform, MQB A0-IN, offer a product, which is well known
and safety norms have destabilised will also help cut development and for its safety and engineering, and
the country’s automobile sector. manufacturing costs, while enabling 95 package it well, it could help with
Between April and November 2019, percent localisation. “The MQB A0-IN the turnaround,” says Pipasarnia.
vehicle sales fell by nearly 20 percent. increases flexibility while developing Rathore also reckons that the decision
There is also the government’s push new vehicles. Most of the technical to hand over the lead to Skoda will
towards more electrification. development will take place in India,” help the Group, particularly since
says Boparai. The new offerings from the Czech brand has a relatively
FocuS on coStS the Group include two SUVs and two better brand positioning.
Under India 2.0, one of the concerns sedans from Skoda and Volkswagen, On paper, the India 2.0 plan has
the Group is trying to address is built entirely in India on the MQB the potential to succeed. And who
the exorbitant price of its vehicles A0-IN platform. Besides these, MQB better than Boparai to know that
and spare parts. Since their launch, A0-IN will support the development of the better the planning, the safer
Skoda and Volkswagen had to further new models. Built specifically and smoother the journey.

january 31, 2020 • forbes india