Launch of India-specific vehicles remains on track for Volkswagen group despite COVID challenge

The coronavirus pandemic has thrown up several challenges in the 'India 2.0' project for the Volkswagen group but the launch timelines for India-specific vehicles have not been altered, according to a senior official of Skoda Auto.

The Czech carmaker Skoda Auto, which is leading the revival of the Volkswagen group in India, is however facing delays in its planned network expansion in India, especially in tier II and III cities due to the health crisis.

"When you look at our product development, we set out with a lot of investment which was already made into the India 2.0 products before the COVID-19 even hit us. Now COVID-19 has hit us in a number of ways regarding our project investments," Skoda Auto India Brand Director Zac Hollis told PTI.

Elaborating the challenges, he said, "The first, we had tools coming from certain markets and certain countries. Tooling for the production line was delayed because of COVID-19. The other situation is we have experts coming in from Europe, who we need to help us develop the production lines for the MQB AO (platform) in India. So they couldn't travel either."

Asked if this could delay the launch of the company's products, Hollis replied in the negative.

"Despite this we are still holding on to our launch timetable for 'India 2.0'. It is a tremendous achievement that we are able to do that in this situation that we have. I am very excited about launching the first car in the middle of next year," he said.

Skoda Auto had unveiled its Vision IN, an India specific mid-sized SUV concept car based on the MQB A0 IN platform, at the Auto Expo earlier this year which is slated to be launched next year.

The SUV will be followed by a mid-sized sedan right at the end of the next year, Hollis said, adding, "We will also bring in the fourth generation Octavia in the early part of next year. This is a completely new car... We will bring Kodiaq (SUV) with BS-VI engine in the early part of next year."

Commenting on the impact of the pandemic on network expansion in India, Hollis said, "We planned to expand the dealer network and service network as part of India 2.0 particularly in tier II and III cities. This has been slowed down a little bit because of the pandemic."

Elaborating further, he said, "You can do certain things through video conferencing but it is very difficult for the network team to visit the site...This presented some challenges for us but we are pleased to say that this year we will go from 86 outlets now to 100 (by the end of the year) and 130 by June next year. So our network expansion plan is a little bit delayed but it continues."

He, however, said, "Still looking at entering 50 new cities by 2020. We will be having 150 outlets by the end of next year and 200 by the time we get to the following year."

Earlier Skoda Auto India had set a target of having 200 outlets by the end of next year.

The Volkswagen group had announced an investment of 1 billion euro (around Rs 7,900 crore) between 2019 and 2021 as part of its latest strategy to enhance presence in India which will be led by group firm Skoda Auto.

Commenting on the current market conditions, Hollis said certainly the market is very buoyant at the moment and the company is expecting a strong festive period.

"There is clearly some pent up demand. There would have been people looking around for personal transport and cars in April and May and they are still around, they are still looking for cars because of the situation. We have seen this also in European markets where there was some pent up demand," he said.

Further, Hollis said, "We are also seeing a desire for personal mobility. A desire for customers to protect themselves, to keep their family safe and maybe in India, they are not quite ready to go back to public transport, even though they have been reassured about sanitisation etc."

Moreover, people are also "a little bit nervous about shared transport" as a result of which demand is seen happening, especially at the entry-level segment of cars, he said.

See Zee Business Live TV Streaming Below:

In September the company expects to sell 1,200 cars, he said, adding that sales in 2020 will definitely be less than last year when it sold 15,000 units.