‘I have a lot of confidence in the long-term growth of the Indian car market’: Skoda Auto’s Zac Hollis

Czech automaker Skoda Auto is bullish on the Indian market despite the challenges beleaguering the automotive sector due to the Covid-19 pandemic, said Zac Hollis, Brand Director, Skoda Auto India.

The pandemic will not be coming in the way of its investment and expansion plans in the country, such as the India 2.0 project with the Volkswagen Group, he said. The India 2.0 project was announced two years ago, with a planned investment of ₹8,000 crore to strengthen the group’s operations in the country. Hollis said that Skoda Auto India plans to sell one lakh units annually by 2025, which will make India one of the top five markets for the company worldwide.

In an interaction with BusinessLine, Hollis talked about how the company will be working on its strategy amid the challenges posed by Covid-19, and the key learnings from its two-decade long presence in India. Edited excerpts:

What was the idea behind launching three new models (Karoq, new Rapid TSI and Superb sedan) at a time like this, as opposed to later when the demand picks up?

It’s the first virtual launch. This is also an industry first. I am very happy that we could do this. It’s right for the current Covid-19 times. Obviously, we can’t bring people together, (but) we still want to showcase the products that are coming to the marketplace. And that’s why we did it this way. We originally planned for three separate launches in April. All that was cancelled (because of Covid-19). We now have 70 per cent of our dealers open in India — that is not only workshops, but also showrooms. So, in parts of India, there is some level of normality starting to return from a business perspective. I also saw a lot of demand from potential customers and potential prospects to launch the cars. We showcased the cars at the Delhi Motor Show, and of course, many people were waiting for them. So we took the decision now to launch the cars.

You mentioned that you are bullish on the Indian market and that by 2025, it would be one of the top five markets globally for Skoda. What is your strategy for the same? Will the pandemic have any effect on this?

Primarily, the strategy behind that growth to one lakh sales (by 2025) is based on new products. So, we will bring two new products to the marketplace in 2021. First is a mid-size SUV and the second is a mid-size sedan. And then, we are looking at further products to the marketplace after that, based on the localisation of the MQB A0 Platform. None of that has changed, our investment plans have not changed. Our plans for the dealer network have also not changed (to increase from 80 touchpoints to 200 in the next three years).

I have a lot of confidence in the long-term growth of the Indian car market. And I have a lot of confidence that the Indian economy will get back on track. Clearly, in the short-to-medium term, there will be an impact from what is happening now. But our investments don’t change. And our strategy is a long-term strategy, and it’s on track.

What are some of the factors you are banking on when it comes to the long-term potential of the Indian market?

...As an economy grows, there is demand for personal mobility, not only in terms of the freedom that mobility gives you, but also in terms of the social status and standing of owning an automotive car, a premium value luxury automotive car, like a Skoda. So, I am confident that as the economy recovers, and as the economy gets back to growing at the levels it grew before, that the car market will also grow.

How is the company planning to offset the impact of Covid-19 on sales in India?

I think the most important thing is that we keep the liquidity and the viability of our dealer network. We need our dealer network to be in place for India 2.0. So we are working in strong partnership with our dealers to make sure they have the liquidity to get themselves through this difficult period. And to make sure that they keep their key staff going forward as well, because I can’t afford to lose dealerships and then get them again in six months or a year’s time, ready for India 2.0. So our key priority during this period has been the viability and the liquidity of our dealer-partners. But it’s not only that. We would be working very closely with the staff in our dealerships. We have been working on training them, and on their morale and motivation also going forward because they are part of the Skoda family in India.

The (recently launched) online booking system is just part of a whole ‘contactless’ experience we are offering to customers. So, we offer this because we recognise that it’s possible that some people are still interested in buying a car, but they feel nervous about going to a dealership. So, a part of our strategy post Covid-19 is to offer a ‘contactless’ experience.

How are you planning to ensure that the India 2.0 project remains on track with all the uncertainty around the Covid-19 situation?

We will protect our investments and investment budgets as much as possible. But let’s also remember that most of these investments have already been made. We have invested already in increasing the production capacity and in engineering. Our job and the job of our engineers is to minimise any delay from what’s happening now with the current Covid-19 situation.

The newly-launched Karoq is brought to India via a completely built-up unit (CBU) route, and only 2,500 CBU units a year are permitted by the Indian government. So do you intend it to be a limited edition model?

We will bring in 1,000 Karoqs into India this year, because this 2,500-limit is shared across all the brands within the Skoda Auto and Volkswagen India Group. So, 1,000 Karoq cars are targeted to be sold within the next 12 months.

Skoda has been in India for the past 20 years. What have been some of the key learnings? How are you planning to do things differently from the past 20 years, if at all?

I think what’s happening now in India is with India 2.0, where we are investing a total of ₹8,000 crore into India the Volkswagen Group. This is a substantial investment that has gone into India, from product development, production, manufacturing facilities and also into sales and marketing. So, the first big change on what we have done over the last 20 years is to bring serious, heavily localised products into big segments in India.

The next thing is to increase our dealer count. Currently, we have 80 sales and service points in India. And we plan to increase this to 200. This means the brand becomes much more accessible. And that’s very important for customers going forward. That’s part of what we will do. And then the other area is that we are working on the whole area of reducing the cost of ownership and of our products. We have reduced prices already last year, and we will look at reducing the price of after-sales and parts in the future. We are also looking to recruit partners with a much greater focus on customer satisfaction and service quality than we have done in the past. This is very important for the success of India 2.0 as well.