Has Skoda outpriced itself in India with the overpriced Kushaq?

With a starting price of Rs 10.50 lakh (ex-showroom), the Skoda Kushaq range starts costs more than two of its prime rivals namely Hyundai Creta and Kia Seltos. Why this, in our opinion, goes against the company's tagline!

By:June 28, 2021 3:14 PM
Skoda Kushaq

 

Since the beginning of 2020 we’ve been hearing a lot about Skoda Auto Volkswagen’s new India 2.0 strategy, the MQB-A0-IN platform, and how the brand will develop vehicles for Indians in India. Fast forward to present times and all of the mentioned things have taken place as Skoda today launched the Kushaq compact SUV. While our review will be live soon I can tell you straight off the hook that Kushaq’s strength is driving pleasure and safety. In other areas. it trails key rivals such as the Hyundai Creta and Kia Seltos. Keeping that in mind and Kushaq’s smaller size in a market where ‘the bigger the better’ works, Skoda was expected to price the Kushaq aggressively. Also, the Kushaq for Skoda is a do-or-die car because the upcoming sedan isn’t going to sell in huge numbers given the size of the segment. Despite such odds, Skoda went ahead and did what most European carmakers have done in India to date – overpricing.

The Skoda Kushaq is an impressive product undoubtedly and absolutely shines when it comes to driving pleasure and dynamics with the 1.5 litre TSI engine and the DSG transmission. It’s great on the safety front as well but beyond that it manages to stay at par with the competition and trails them in some areas. In addition, the Skoda Kushaq is smaller than the Hyundai Creta and Kia Seltos. Indians love big vehicles and that is also one of the reasons why buyers prefer SUVs so it’s hard to understand how a platform developed specifically for India failed to yield a size matching the key rivals.

Even if one were to avoid the size debate there’s the unavoidable lack of features. I’m not a big fan of sunroofs but if my job was to sell cars then I would surely put a big panoramic sunroof in my cars if my customers want it. The Skoda Kushaq after all of the focus on India and on Indian buyers doesn’t have a panoramic sunroof, something its rivals have. The Kushaq is also not a fully connected vehicle and misses out on some more features compared to the Korean competition. Indians love to move with a lot of stuff but the Kushaq has the smallest boot in the segment. The Skoda Kushaq isn’t under-equipped but its rivals in top trims are loaded to the gills and it simply doesn’t match them. Where did Skoda get its market research done from!!

Hyundai Creta, Kia Seltos

Still, when I drove the Skoda Kushaq I was willing to accept that the Kushaq can become a success story in India. I thought so because I felt that the opportunity for the Kushaq lies in not rivaling the Creta and Seltos but in being positioned as an upgrade from Venue and Sonet while sitting a little below the larger Koreans. By doing so, many buyers would’ve been tempted to go for the more premium and much better (Kushaq is better than Sonet/ Venue) offering from Skoda. Also, the Creta and Seltos aren’t exactly cheap but they’re so full of features that buyers don’t mind the slightly higher EMI or the selling price. With a price range of Rs 9 to 15.5 lakh, the Skoda Kushaq would have been a mighty attractive option even for those who find the Koreans a little beyond their budget. In addition, the Kushaq has no diesel engine on offer. More than 50% of Creta sales come from diesel buyers so let’s not even get into what some market research report would’ve found. Despite all of this, Skoda just went ahead and overpriced the Kushaq, and that too by a big margin.

The Skoda Kushaq in reality is an overpriced vehicle, especially in top trims. Allow me to give some perspective. The top-end Kushaq Style 1.5 TSI DSG is priced at Rs 17.6 lakh, ex-showroom. In comparison, the Creta top version sells for Rs 17.7 lakh. The Kia Seltos is on sale at Rs 17.65 lakh and both of them, as I mentioned earlier, have more features and are bigger. Yes, the Kushaq is more fun to drive than the Korean siblings but that alone doesn’t justify the high prices. For a few thousand more, Rs 17.93 lakh to be precise, one can buy the much larger (6 seats)yet well-equipped Hyundai Alcazar Prestige. They aren’t even in the same segment but that’s how overpriced the Skoda Kushaq is!

Watch Video | Hyundai Creta vs Kia Seltos Comparison Review:

That said, the lower trims in Kushaq offer much better value than the base Korean variants as Skoda offers more features here and ESC as standard, which is a great thing. However, once you get to the 1.5 L version of the Kushaq, that’s where it appears to be priced quite high. The company claims 95% localisation but I doubt it’s by value because the 1.5 L engine is imported. Localisation by content is not hard to achieve and reflects the truth only as much as sales figures by carmakers do. The truth as we all know is what FADA numbers are when it comes to sales and similarly, localisation should be measured by value, not content. For the 1.0 litre variants, the figure would certainly be higher as that engine is made in India. So if the localisation percentage is really that high then how was the company not able to price the Kushaq competitively? Either the India 2.0 strategy isn’t working out well or the pricing strategy is flawed it seems.

Skoda’s pricing then brings us back to what I said earlier. European carmakers often overprice their mass-market cars in India. The story in the luxury segment is different as 5 to 10 % difference in prices doesn’t affect the final buying decision but in volume segments, it makes a big difference. Look at what Kia did with the Seltos. That’s how one develops an establishment or turnaround strategy. Whether it was misguided market research that was responsible for Skoda’s pricing or was it something else? That’s something we might never know but what leaves me surprised is the inability of Skoda to understand the Indian market in terms of volume segments and crack it despite having been here for years. This is where companies such as Maruti Suzuki, Hyundai and Kia are so good at. European carmakers also need to understand that Indians don’t care about the premium image as much as some brands claim but give utmost importance to value-for-money. Couple VFM with a premium positioning and you’ve got a winner. This is why despite being an impressive product and genuinely brilliant car to drive the Kushaq is overpriced. While the Kushaq like most Skoda vehicles is Simply Clever, the pricing doesn’t seem so.

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