The Hindu : Skoda Auto lines up new variants

Online edition of India's National Newspaper
Saturday, Aug 10, 2002

Business

Business

Skoda Auto lines up new variants

By Ramnath Subbu

MUMBAI AUG. 9. Skoda Auto India, a subsidiary of the Czech car maker, Skoda Auto, is to launch Elegance, Laurin & Klement and Superb this year. Skoda makes Octavia of which Elegance is a premium version. It is to be launched in the next few weeks priced at around Rs. 12.5 lakhs. Laurin & Klement (L&K), to be launched in October, will be priced at Rs. 14.5-15.5 lakhs.

The 2,800cc Superb will be launched in November and could be priced around Rs. 20 lakhs.

Speaking to The Hindu, Imran Hassen, managing director, Skoda Auto India, said, "We will bring in the variants starting next month with Elegance. The dealerships and sales and service points will decide and indicate what the market requires — an E-class or a model below the Octavia. I have no problem in bringing in technology. I cannot bring in older technology for India as for us, India is not a second-class market".

Skoda Auto is a 100 per cent subsidiary of the German Volkswagen (VW) group. "The Volkswagen group is not known besides the Beetle and we came in with Skoda Auto — there was no education about the company or brand. Today, it would be difficult to overtake us considering the numbers that Octavia has. This is the advantage as we have got technology," said Mr. Hassen.

At present, Skoda assembles semi knocked down (SKD) kits of Octavia in Aurangabad and this month, it is starting the upgradation of line by assembling engines and gearboxes for Octavia. This will reduce the import duty to 89 per cent from 122 per cent. The assembly line has a capacity of 6,000 units annually.

In January-June, the company sold 1,750 units of Octavia. It has targeted a sales of 6,000 cars by December this year. "We started manufacturing in mid-March but will stick to the target. The sales achieved are higher than plans. The automobile market and the segment is declining but Octavia is going the other way and I am not complaining. We belong to the D segment and there is no car offered between Rs. 9-12 lakhs — those who were there earlier have left the segment," said Mr. Hassen. The company has incurred a capital cost of $20 million to date and originally, the aim was to break-even by end-2003. Mr. Hassen, said these plans had been affected by the rupee devaluation.

Regarding setting up of a full-fledged manufacturing facility in India rather than importing SKDs, Mr. Hassen said although there were limitations, the company was working towards indigenisation. "India has guidelines and notifications and it is difficult for a manufacturer. Contrary to perception, it is an expensive land for manufacturing. Taking into account the import duty and other considerations, it is 30-40 per cent more expensive here," said Mr. Hassen, adding, "But, we have started in spite all the problems and it will improve step by step and we will gradually indigenise. We are looking at local original equipment manufacturers (OEMs). It is simple — they import the technology, make it here and give it to me but we have to be convinced about quality standards first".

Earlier, Skoda was keen to export its vehicles from India to SAARC countries. "We can still source from here to supply other markets but first, Skoda Auto India should be an economical base, I have no other targets. We can subsidise something for some time but ultimately we have to make profits," said Mr. Hassen. Skoda started with three dealers and today it has 15. By the end of the year, the company will have 17-18 dealers with another 30 sales and service points.

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