‘India a strategic base to build exports to Middle East and South East Asia for Skoda’: MD Piyush Arora

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Multiple model upgrades and tweaks in 2023 will help Skoda Auto Volkswagen sustain growth in India

Having laid a decent foundation for the India 2.0 project, the Volkswagen Group is now looking to build India as a strategic export base for the Skoda brand.

India, which has already become the third largest market in the world for Skoda, will take greater responsibility to develop the Middle East and the South East Asian region for the Czech brand. Skoda says it is open to joining hands with dealers, distributors and assemblers in these regions to increase its volume base. The company is exploring countries like Indonesia, Thailand and Malaysia as potential markets to expand into.

Skoda to focus on South East Asian and Middle Eastern markets for exports
As its first step, the Skoda brand will be entering the Vietnamese market in 2023 with completely built imports (CBUs), before it ships CKD kits from India to the South East Asian market in 2024. The company expects Vietnam to bring in incremental sales of 30,000 units per annum over the mid-term.

Piyush Arora, Managing Director of Skoda Auto Volkswagen India, told our sister publication Autocar Professional that India is playing a major role in developing the South East Asian region and the Middle East, and that these are the two main focus areas Skoda is looking at to go beyond the business which it has today.

"What is the best possible way to get more entry and market share into these markets is part of our overall strategy development for Skoda in terms of region,” Arora said. “We have partners in the Middle East and will continue to [explore]. But once we have identified the right strategy for the right product for the different markets, then we'll start looking at that [role of partners]. Our immediate priority is Vietnam."

Exports have been crucial for Skoda Auto Volkswagen Group​

To be sure, exports have been a critical pillar for Skoda Auto Volkswagen Group to ensure that the company enjoys a scale advantage and makes profits. For the Volkswagen brand, India has been an important base for exports to South Africa and Mexico for the Vento sedan in the past. While Volkswagen will continue to serve the Mexican market, the development of exports out of India for Skoda will bring in incremental volumes for the MQB A0 platform cars in the future, helping the Group to reinvest into new models in the future.

Already a dedicated exports team for the Skoda brand has been set up locally which works in tandem with the HQ in defining the potential growth markets in the future. Even a dedicated bay has been created for parts and components exports from India to serve these needs.

Over 20 new model launches in 2023
Back home, Arora says the demand momentum remains strong, however, the market growth rate is likely to drop to single digits of 5-8 percent in the next financial year. But the Group will continue to look at outperforming the market as supply chain improves.

"We are looking at a double-digit growth because we clearly want to move in the direction of the Group’s [target of] 5 percent market share [in India]. Last year was not only constrained because of the supply situation, but also because of product availability. Slavia was only available for 9 or 10 months, while Volkswagen Virtus was available only for 6 months. Having the availability of all products, we look at double-digit growth. Not only for Skoda and Volkswagen, but for the complete group," said Arora.

In the calendar year 2022, Skoda Auto Volkswagen produced 1,34,000 units with domestic sales of 1,01,000 units across all its brands – Skoda, Volkswagen, Audi, Porsche and Lamborghini. The Group saw a 1 percentage point increase in its market share in 2022.

Arora says in December, the Group had a market share of 4 percent and he is confident that a raft of upgrades and tweaks for future models in 2023 will ensure double-digit growth and improvement in market share. Though Arora did not mention any specific product names, he said the Group is looking at having over 20 product or model updates across brands this year.

Arora says in December, the Group had a market share of 4 percent and he is confident that a raft of upgrades and tweaks for future models in 2023 will ensure double-digit growth and improvement in market share. Though Arora did not mention any specific product names, he said the Group is looking at having over 20 product or model updates across brands this year.

According to company sources, the Group is looking at a production plan of 1,57,000 to 1,75,00 units for the current calendar year on the back of improved supplies and an expected rise in export volumes. “For 2023, the focus will be on scaling new heights on a very strongly built foundation over the past years,” he added.

EV plans for India are progressing, assured Arora, and the Group is going to rely on CBUs and CKDs before locally produced models for India are firmed up. The VW Group’s pact with Mahindra may help the Indian subsidiary too, believes Arora.

India to be a strategic export base for Skoda: MD Piyush Arora | Autocar India

Skoda Auto Volkswagen India’s MD Piyush Arora says India will play a major role in developing Middle Eastern and South East Asian markets. Click here to read more.

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Skoda India to help set up Vietnam business

In what is possibly the first for a carmaker in India, Skoda Auto Volkswagen India (SAVWIPL) is helping facilitate the Czech carmaker Skoda Auto’s entry into the Southeast Asian country Vietnam, a top company executive said.

Skoda Auto is part of the Volkswagen Group, and will soon start operations in Vietnam.

“We want to place India on top of the global manufacturing map of the Volkswagen Group,” Piyush Arora, MD & CEO of SAVWIPL, told FE. “As part of that strategy, when Skoda Auto is entering Vietnam, we are setting up a 16,000 square metre facility within our 543-acre Pune plant, to meet the requirements of the Vietnamese market.

In October 2022, Skoda Auto had announced it will enter the Vietnamese market with Thanh Cong Motor as the local partner.

In 2023, the Czech carmaker will start selling made-in-Europe models such as the Kodiaq, Karoq, Superb and Octavia in Vietnam.

The construction of a Thanh Cong Motor-owned production line is underway and should be completed in the first half of 2024. SAVWIPL will manufacture sub-assemblies of the Kushaq and Slavia at its 16,000 square-metre facility. These kits will then be shipped to Vietnam and assembled into cars. “Up to 95% parts of the Kushaq and Slavia come from Indian suppliers, so it’s a shot in the arm for them as well,” Arora said.

Almost 25 per cent of our vendors supplying parts to India have become first-time suppliers to VW Group for our global manufacturing operations

For the Vietnamese, the Kushaq will be available to order in the first half of 2024, and orders for the Slavia can be placed from the fourth quarter of 2024.

Skoda Auto said that the sales potential in Vietnam is 30,000 cars initially, which will soon rise to 40,000 units annually.

According to the Vietnam Automobile Manufacturers’ Association, in CY22 as many as 325,270 cars were sold in the country, making it Southeast Asia’s fourth-largest car market, after Indonesia, Malaysia and Thailand.

“Apart from that, we are looking at growing numbers in India, exports consolidation into South America, and exports opportunities in the Middle East and North Africa,” Arora said.

As far as India operations are concerned, SAVWIPL (which oversees Indian operations of Skoda, Volkswagen, Audi, Porsche and Lamborghini) sold 134,667 cars in 2022, of which 33,397 cars were exported and 101,270 were sold in the domestic market. “We registered a growth of 85-86% for the overall group sales in 2022,” Arora said. “In fact, in December 2022, we ended with almost 4% market share and the overall market gain was close to 1% (the group’s total market share stood at 2.67% in 2022). This year, we want to grow faster than the market. Last year the automotive industry recorded very high growth — in the range of 22-23% — and this year though it may not be that high, we will definitely try to achieve double digit growth.”

Brand wise, the Skoda brand grew 125% in India in 2022 (53,721 cars sold), and the Volkswagen brand saw 58% growth, albeit on a very low base of 2021.

SAVWIPL is also testing some electric cars on Indian roads and may launch these in India later this year. “We have brought the Skoda Enyaq and Volkswagen ID.4 and are testing these on Indian roads,” he said. “We are extremely satisfied with the feedback.”

SAVWIPL is following a top-down approach in electric mobility, ie first importing electric cars, and then looking at how and when to assemble those cars locally. In 2021, the group’s luxury brand Audi had launched five electric car models under the e-tron sub-brand and Porsche had launched the Taycan electric supercar, both as CBU imports

https://www.financialexpress.com/express-mobility/vehicles/passenger-vehicles/skoda-india-to-help-set-up-vietnam-business/2976957/