Skoda may return to sub-4 meter compact car segment

Skoda could re-enter the small car segment in India if demand for such cars continues to remain robust in the coming years, a top company official said on February 3.

Skoda Auto CEO Bernhard Maier told Moneycontrol, "We will not say no to being in that segment. At this point in time, we decided to serve the increasing amount of customers who are in the middle class who are seeking cars above four meters. Once these cars are successfully implemented in the market we do have the capacity to think further."

"I have had numerous discussions about the sub 4 meter and its advantages. We need predictable and reliable guidelines for the development of cars. If there is a clear and sustainable need for cars below four meters then this platform is versatile to do any kind of product," Maier said.

Part of the Volkswagen (VW) group, Czech car brand Skoda phased-out the Fabia hatchback in 2012-13, and has not been serious about the sub-4 meter segment since the exit. The segment generates almost half of India’s passenger vehicle (PV) volumes and is dominated by local heavyweight Maruti Suzuki.

Fabia served as Skoda’s response to Maruti Suzuki’s runaway hit Swift. But, as most of its parts were imported, it exposed itself to forex fluctuations. Mounting competition and loss of consumer interest forced Skoda to withdraw the Fabia from the market.

The possibility of churning out a hatchback on the MQBA0 platform will depend on the success of the platform in India.

Both VW and Skoda have just one model on sale in the below 4 meters space. The Polo is the only hatchback model on sale in India presently. Hatchbacks command a share of about 45 percent in India. VW had to withdraw the built-for-India Ameo compact sedan following poor response.

Some of the biggest names in the automotive world such as Ford, Fiat, Honda, Nissan, Renault and Toyota have failed to make a mark in the hatchback space. These companies have found it difficult to be price competitive in India or offer products with the same quality and safety as they do in developed markets.

VW and Skoda are recharting their route in India after having struggled for several years against strong competition from Japanese and Korean companies. The two brands are witnessing a joint investment of Rs 7,900 crore that will give birth to several products using the MQBA0 platform. The first of such products by Skoda, an SUV, will hit the market in early 2021.