In the high-stakes Indian car market, the Volkswagen (VW) Group has been a cautious giant for almost two decades. While competitors have flooded the market with budget-friendly EVs and feature-rich cars, the German conglomerate – which sells Volkswagen, Skoda, Audi, Bentley, Lamborghini, and Porsche brands in India – has maintained a measured approach.
Yes, it did launch the Skoda-led India 2.0 project in 2018-19, and made-for-India cars 2021 onwards, but its market share has hovered in the 1.5-2.5% band, despite the stated quest for 5%.
But the launch of the sub-4 metre SUV Skoda Kylaq last year – which sold a respectable 46,872 units in 2025 – is pivoting the Group from being a niche player to a volume contender.
The Kylaq effect
“The sub-4 metre SUV has been a breakout success, driving 36% overall growth for the Group,” Piyush Arora, MD & CEO of Skoda Auto Volkswagen India Pvt Ltd, told FE. “It also propelled India to the fourth-largest position among Skoda’s global markets. We’ve big plans in 2026 to sustain this momentum, and will introduce 10 new products, including new launches, mid-life refreshes, and new feature trims.”
But while the Kylaq has been a success, sales of established models like the Kushaq, Taigun, and Slavia saw a dip last year. Arora, however, dismissed concerns of a slowdown. “Different models have different lifecycles. Some sluggishness comes as the lifecycle evolves,” he said. “As we launch new versions of these models, sales will pick up. The new Kushaq, launched last week, will definitely boost sales.”
Volkswagen sub-4 metre SUV
The elephant in the room remains a potential Volkswagen sibling to the Kylaq. While Arora playfully deflected rumours of a VW sub-4 metre SUV being in the works, the logic for its existence is undeniable. To hit the 5% market share target, the Group needs more than just one volume car.
Electrification
Skoda has been testing the Enyaq electric SUV on Indian roads for a while now, and Volkswagen had displayed the ID.4 to the Indian public a couple of years ago, but there’s no announcement of an EV launch in the near future. Arora said the Group isn’t going slow in terms of electrification, but has a measured approach, pointing to a stark reality – despite the hype and so many EVs in the market, India’s EV penetration remains a modest 4%. “Our focus on electrification is high globally; Volkswagen is the largest seller of EVs in Europe,” he said. “But in India, the charging infrastructure is still small.
The customer is opening up, but we are looking at opportunities to be part of this market with products made specifically for India.” The wait, he said, is about ensuring the EV is “India-ready” rather than just “India-bound.” He added that while global icons like the ID.4 will eventually arrive, the real volume drivers will be locally manufactured EVs designed for both domestic consumption and export – a milestone expected to materialise before the end of this decade.
Engineering DNA
Last year, Skoda’s global CEO said that cars for India may be “overengineered,” i.e., extremely high-end in mechanicals, at the cost of bells and whistles – like ADAS and sunroof – that Indian consumers crave. Sitting in India, heading the plant, Arora views this as a balancing act. “Our product development has always been driven by safety and driving dynamics. We are evaluating how to achieve deep localisation without deviating from our DNA,” he said.
This philosophy explains the Group’s current absence from the ADAS (advanced driver-assistance systems) race. While competitors use ADAS as a marketing tool, Arora said that for the Group, the technology must be “really engineered and suited for Indian driving conditions before it reaches the consumer.”
Beyond India 2.0
As the VW Group goes from India 2.0 to its next phase, the focus is shifting from survival to scale. By leveraging shared platforms and eyeing deep localisation, the Group is betting that Indian consumers will eventually prioritise driving dynamics and structural integrity over fleeting tech trends. “The Kylaq has proven that there is an appetite for European engineering at an Indian price point,” Arora said. The question now is: how well the Group can replicate the success of the Kylaq in its future models.
