Skoda’s India strategy: Getting closer to the customer

When Skoda entered India 25 years ago, languishing in the bottom half of the manufacturers on monthly sales wasn’t in their plan. Skoda’s journey may be among the most interesting of all automakers because even though it currently is behind its ambitions, the brand has given us some highly memorable cars – Octavia, Laura, Superb, Kodiaq, Octavia RS and a favourite among many, Yeti. Of course the brand has launched a few more cars over the years, but these are what they are mostly known for. Though, of the aforementioned cars, only Kodiaq remains in the market at the time of writing. The reasons are many – economic environments, supply chain challenges, strategy misses, after sales mishaps, and probably the most significant is the lack of market understanding from the senior leadership. And that is primarily because Skoda has always had a foreign assigned leader at the helm. Until now. With the recent management reshuffle, we now see Ashish Gupta as the Brand Director for Skoda India (formerly Brand Director at Volkswagen). He shared his vision for Skoda’s future direction in India with us, complimented by a small drive experience where we got to experience the Kodiaq in off-road conditions. More on that at the end of this piece. But I start this piece by laying the challenges and way forward strategy as described to us by Ashish.

What next for Skoda?

As of 2024, Skoda has about 260 customer touchpoints in India. These include sales showrooms, service centres and 3S facilities (sales, service, spares). That is a growth of about 110 touchpoints since the last decade. The plan is to keep growing these touchpoints to have a wider reach and access because Ashish’s main mantra is to “get closer to the customer”. This expansion plan states a target of 350 touchpoints in 200 cities by the end of 2025.

Further, to sustain these touchpoints the growth strategy is divided into three buckets:

1. Relevance

2. Differentiation

3. Trust

Nice sounding words. But they have sub-buckets to give them meaning.

Relevance: To find relevance in a customer’s life, Skoda wants to get into newer segments (for e.g. Kylaq), which also makes them available at price points which they were not currently present in. To get into newer segments, Skoda needs new products. As of now, we are aware of the possible launch of an Octavia RS, Superb and then the EVs like Enyaq and Elroq. There may be more, and we will bring that news when we have the details. With the launch of the Kylaq (and considering the already existing portfolio), Skoda is now able to address 58 per cent of the Indian market, in consideration of the market share of all the segments combined. Before the Kylaq, they could address a far lower 28 per cent of the market. The Kylaq has also brought down the entry price point to buying a Skoda to ₹8.25 lakh.

Relevance also includes expanding into new geographies, which is where the increase in touchpoints helps and also making the service costs cheaper (or communicate to the market on the otherwise built perception). Ashish was keen to point out that the service costs of Skoda cars are among the most competitive in the market with costs ranging between ₹0.47 to ₹0.50 per km for Kylaq, Slavia and Kushaq. Skoda also offers a complimentary maintenance package for the first year including parts on all their new car sales.

Differentiation: This sub-bucket is largely where the marketing and communications team would need to shine. It largely involves creating communication that differentiates the Skoda brand from VW and the rest of its competitors, while attempting to connect with the customer more closely with cultural and meaningful narratives. On a product front, Skoda sees one major differentiation. In their words, the current split in the market between automatic transmissions and manual transmissions sold is 25:75 respectively. Skoda sees this as a differentiating opportunity. With brilliant offerings like the 6-speed AT and the 7-speed DSG, they intend to democratise automatic gearboxes for a far wider range of audience and establish themselves as the brand that sells the best automatic gearboxed cars. It’s not about bringing new gearboxes, but about communicating their strength.

Trust: Building of trust is a softer aspect of the success of the previous two sub-buckets. Service experiences, brand experiences, product experiences form a part of ensuring the customer sees stability and can rely on the brand and its products. The biggest takeaway for me here was what Ashish mentioned towards the end. “We do not intend to enter portfolios or markets that we cannot sustain”. One of the simple deciphers of this statement is that we aren’t sure if we will get diesels back in Skoda at the moment. Nonetheless it is a forward thinking step, which aligns with the values Ashish wants to instil in the brand moving forward. It signifies that the customer can purchase a Skoda product without having to worry about its discontinuance and subsequent after sales or resale value based worries.

In all, now Skoda has an Indian leader who may understand the complicated nuances of our market more than his predecessors and he has charted a direction. The direction intends to play on the brand’s strengths and talk about them. Ashish pointed out that since the launch of the Kylaq, Skoda has moved from 11th to 7th position in overall sales numbers among the PV manufacturers. Their target would be to try and hold on to the position by the end of the year. The carmaker currently right behind them is MG, with only a slender margin. This might be one to watch out for at the end of the year.

Skoda Kodiaq off-road impressions

This is not a proper off-road test for the Kodiaq as we were a part of the experience that Skoda had curated to demonstrate certain abilities of the vehicle, when the road ends. The track was made with various obstacles designed to test the car’s strengths and showcase their ability. The obstacles ranged from articulation, steep ascents and descents, side slopes, a ditch and a braking zone. The ground was slightly loose, with the soil holding together only because of the overnight rain, and the car was not modified in any way and still wore its from showroom H/T tyres.

The instructor had told me beforehand that the car is capable of far more that what this course offers and they have kept the level low because of the wide variety of people and their respective driving skills who will be experiencing this setup. So of course, with a bit of guidance from the instructor who sat beside me, I and the car were easily able to cover all the obstacles. While they may not have been challenging, they did tell me some things about the Kodiaq.

The Kodiaq remains extremely poised. Within the cabin it’s hard to decipher that the car may have lifted a wheel, or that the car is traversing through heavy undulations. This does not mean that you remain oblivious of the nature of the path, there was enough feedback from the steering and the suspension to become aware of the obstacle, but without the drama of feeling the need to do something significant. At no point during the course did I have to make a sudden or awkward adjustment. The off-road display helps too, as it tells you the bank angle, roll and pitch levels and tyre angle. But two aspects stood out for me in the experience, which may be more relevant to an average Kodiaq user. First was something called chicken holes. Small potholes were dug out in a seemingly erratic manner, aligned to where the two wheels would be. I was asked to drive through them without worrying about my speed. The steering remained dead straight, not generating the erratic feedback that could veer the car out of course – possibly causing a collision on the side in real life conditions. And second was the braking zone. Here I was again asked to accelerate hard and brake hard at a patch where the wheels on the left were on a cemented patch and the ones on the right were on soil and gravel. With most cars, hard braking on this patch would cause the car to swerve towards the side which has more grip. The Kodiaq modulated the braking pressure on each tyre, regardless of my input, to keep the car dead straight while maintaining a very respectable braking distance. In real life scenarios, this balance could mean heading towards an oncoming motorist or staying in your path.

Even though the experience proved the Kodiaq’s worth off the road, it is still a soft off roader rather than a hard core 4x4. And seeing the car from that lens, this is an ace which is a proven performer on the road and will continue to do so when you decide to take the lesser known road.