In conversation with Gurpratap Boparai, head of VW Group

In conversation with Gurpratap Boparai, head of VW Group

“The whole operation in India will be run by Skoda” says head of VW Group in India, Gurpratap Boparai.  Mr Boparai gives us insights about India 2.0 strategy and what to expect during the coming year and the future.

We have a target between the Group brands to achieve 5 per cent market share by 2020

“India 2.0 shouldn’t be confused or limited with the first set of products we bring. It is a concerted strategy. 2.0 was supposed to be an internal name. The way forward is that we have to be competitive even on the product. The product has to be competitive with the other products that are available in the market. It has to have the attributes that our customers here will appreciate. We will never sacrifice on the DNA. We have to get more features and things for our customers here to appreciate and that is going to be the thrust. Making them affordable, competitively priced, we have to do a lot of work right from engineering. The way we engineer them, at what cost and how much we localise, getting our factory cost down, so that we can be truly competitive. The first products will chart the way forward for future products.”

We are working on two body styles for each brand on the A0 platform

“The smaller A segment has minimal growth, it’s only B segment onwards that the growth is. I think we should operate there. Going lower than what we currently are will not make sense for us (in terms of size), we would work our way up from there.

We will evaluate the possibility of a hatchback for Skoda. We will not give out product plans, and we will progress from there. The market is going to change significantly between now and 2020, and we have to rework the economics at the appropriate time and see which is the segment where we will get the next product.

The products we are talking about are for India, specifically for India and will be exported to other countries. They will be launched here first. Even where they may share their name, with another car elsewhere, it will be another car here. Tailored to our requirements.”

The rejig is mainly for more synergies between the various Group entities in India

“Whether it is operational synergies or for addressing certain norms like CO2 norms that will come in and also towards having a common voice towards the government authority and policy makers as well as towards headquarters. So it’s an India voice rather than each brand’s voice going into the headquarters. We are able to then co ordinate better with the headquarters what we require here in India.”

We are going to have a very high level of localisation

“At launch we will have a higher level of localisation than we have today on cars that have been around for 8 years. We are aiming for 95 per cent on the vehicle parts.

To my mind we should be able to achieve it within six months of the launch. It becomes a little more feasible, now that Skoda will be leading that effort and clearly Skoda is a little more used to working in this manner. That is also why Skoda is entrusted with the development work not only on the car but also with the suppliers. In the global scheme of things, there are two regions that the Group has entrusted to Skoda — India and Russia. India, by the way, is classified under a region. That is because the Group feels that Skoda is best equipped to address the need for these regions, from an engineering as well as a manufacturing standpoint.

We will have an export element also. But the focus is more on the domestic market. Export is, let’s say, a prop for getting the right volumes to justify high levels of localisation. We will have local engines in these cars from day one. There will be a new family of engines. Gearboxes we may not localise as we have abundant capacity elsewhere and electric cars won’t be using gearboxes. Right now it does not make any sense to install further gearbox capacity when you have got enough globally.”

Decontented car would still be too expensive and that is not what we are doing

“From 2019 onwards you will have to crash test, which is mandatory for all cars. Then you have BS VI coming in 2020. So the content that is there in today’s [MQB] platform does not really go out. There will be other changes that we will do specifically for India, but that is more to suit the car and the platform for India. You are aware that we did two conversations in the past and tried to work platform synergies with other partners [Maruti Suzuki and then Tata Motors]. The end result was when we considered these new norms and what it would take to upgrade those platforms to new norms, we came to a cost base which is very similar to what we can achieve, with the MQB A0.

We have independence from the global platform and we can work on it for our requirements. And we are not really tied now to what is happening on that platform in Germany for example. We realise the engineering costs themselves are a significant part of the final cost of the vehicle and if we can do things more economically here, we should try and do that. It is a part of long term strategy also for India to set up engineering here so that in the future we can do much more engineering work here for cars meant for India. The platform is largely being engineered in Mladá Boleslav, Czech Republic. Some elements of the top hat, the interiors, are done in India.”

The Indian T-Cross will be different from the Brazilian T-Cross

“In terms of space and how the Indian customer wants the SUV to be rugged looking and masculine. Masculine is a politically incorrect word to use, but let’s say more rugged and muscular.”

There will be a slight difference in pricing

But there won’t be as pronounced as they are elsewhere in the world. That is also because of the positioning that Skoda has today in India. [On further prodding if Skoda will still be cheaper than VW] Minus a delta. Don’t ask me the delta.”

CNG is an excellent option for India

“We have abundant resources of CNG. Infrastructure has to be built for both CNG and electrics. We have to see as a country where we want to head. One of the stated aims is import substitution. May be CNG makes more sense if we can get a network and let us not forget, if we get electrics, the batteries will be coming from China. The cells are going to be from China. Maybe assembling the batteries will be done here but the monopoly is there. We will be reducing our oil bill but we will be increasing other import bills. We have abundant resources of CNG from a country perspective also. The Co2 emissions from CNG are close to diesel engine emissions minus the other challenges that you have on the after treatment of the exhaust.”

The Audi e-tron will be here next year

“The electrics have to make sense at what price point you can bring them in. That has to be workable. Right now, the economics for electrics work for premium cars and not for everyday cars. Those just don’t work and in Europe also trying to make the economics work is really tough. You can do hybridisation [on MQB], but the economics work on bigger cars. There are no limitations on the platform.”

There is no plan for Audi to have a local product

“Audi will continue with the business model that it has, most of the products assembled here and some CBUs. It’s premature to localise premium segment cars, but at some point it has to happen. The Indian luxury market will grow, we will address that too.”

We won’t have any mass market volume product till 2021

“We have some refreshes lined up for the models, minor refreshes like some interesting things on the powertrain side so that they continue to be competitive. The products by and large will be BS VI. There may be one or two exceptions but we will see.”

Now that I drive one, I can understand the response

“The Octavia RS is a good car but the demand for such cars is difficult to predict. If we knew what the demand was going to be we would have ordered more kits. The logistics pipeline is pretty long. Frankly we were taken by surprise. We didn’t expect such an enthusiastic response for the car.”

Motorsport is very close to Skoda and VW’s heart

“We would ideally want to make a positive case out of motorsport as well. It is premature to say [that activities will be ramped up], but the intent is to keep it.”

The aesthetics of a 4-metre sedan is extremely difficult

“We have no plans to do [a Skoda-badged Ameo compact sedan]. Skoda’s level in the market is at a premium level and this is where we want to focus. Plans can change but not for the moment. It’s a very unique segment to India, if you look at it logically, it’s three boxes less space efficient than a two box. Ideally you would want it to be two box for a smaller car, to maximise the space.”

The whole operation in India will be run by Skoda

“Whether it’s an Audi, VW or a Lamborghini that has to be manufactured in India, it will be in a Skoda factory. Not sure what we would call it [rename the VW plant in Pune to Skoda], but it has an emotional effect with people who work there. We are sensitive to those things, ideally I would like to retain both names. We will go through further organisational change, this is just the start. The idea is to make the structure simpler. Changes that would bring more synergy and make us more effective operationally. Not just manufacturing, but the synergies will be there to help us take the project forward, not cut jobs. We will add jobs.”

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