No place for cheap sub-four meter cars in our India revival plan: Skoda

Skoda Auto and parent company Volkswagen do not see themselves as serious players in the sub-four meter car segment in India learning from the follies of their peers such as Honda and Toyota who have failed to make a dent in the fiercely competitive segment.

Speaking to Moneycontrol, Klaus-Dieter Schurmann, the Chief Financial Officer of Skoda Auto said the sub-four meter has a price positioning not only unique to India but something not possible for Skoda to accept given the premium brand recall it enjoys in the country.

“We are not the cheap brand in the market and we are not assumed to be cheap. The sub-four meter is very cheap. We don’t see our positioning there that’s why we mentioned that the mid-size SUV that will come is not going to be a sub-four meter, which means we are not going to play in the segment," said Schurmann.

The Czech car brand today unveiled a 1 billion euro (Rs 7,900 crore) revival plan for the Indian market which involves developing new products from scratch, setting up of a product development center, much higher degree of localisation, and much better focus on exports.

India’s sub-four meter car market controls more than 70 percent of the total sales comprising hatchbacks, crossovers, sports utility vehicles, people carriers and compact sedans. The top ten best selling passenger vehicles sold in India all measure less than four meters.

While India’s biggest car maker Maruti Suzuki is the market leader in the segment with top-selling models such as Swift, Dzire, Alto, Brezza, and Baleno, others like Honda and Toyota who too entered the price competitive segment have received a lukewarm response.

Both the competing Japanese brands enjoyed a premium positioning in India but with the launches of models like Brio, Amaze (by Honda) and Etios Liva (by Toyota) the two brands have taken a beating. Toyota launched the mid-sized sedan, Etios which too failed to take off.

Even Volkswagen saw demand slide for its made-for-India product Ameo, which is a compact sedan less than four meters. Built on the Vento platform the Ameo is manufactured only in India.

German and Japanese companies have found it difficult to match the vehicle cost structures of market leaders such as Maruti Suzuki and Hyundai in the sub-four meter segment.

“Offering products as that price point without compromising on quality or safety is very difficult. It’s a long drawn process and not something which can be learned and understood in three years, ” said an official from Skoda.