In what is possibly the first for a carmaker in India, Skoda Auto Volkswagen India (SAVWIPL) is helping facilitate the Czech carmaker Skoda Auto’s entry into the Southeast Asian country Vietnam, a top company executive said.
Skoda Auto is part of the Volkswagen Group, and will soon start operations in Vietnam.
“We want to place India on top of the global manufacturing map of the Volkswagen Group,” Piyush Arora, MD & CEO of SAVWIPL, told FE. “As part of that strategy, when Skoda Auto is entering Vietnam, we are setting up a 16,000 square metre facility within our 543-acre Pune plant, to meet the requirements of the Vietnamese market.”
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Arora, however, didn’t share the investment that will go into building that facility.
In October 2022, Skoda Auto had announced it will enter the Vietnamese market with Thanh Cong Motor as the local partner.
In 2023, the Czech carmaker will start selling made-in-Europe models such as the Kodiaq, Karoq, Superb and Octavia in Vietnam.
The construction of a Thanh Cong Motor-owned production line is underway and should be completed in the first half of 2024. SAVWIPL will manufacture sub-assemblies of the Kushaq and Slavia at its 16,000 square-metre facility. These kits will then be shipped to Vietnam and assembled into cars. “Up to 95% parts of the Kushaq and Slavia come from Indian suppliers, so it’s a shot in the arm for them as well,” Arora said.
For the Vietnamese, the Kushaq will be available to order in the first half of 2024, and orders for the Slavia can be placed from the fourth quarter of 2024.
Skoda Auto said that the sales potential in Vietnam is 30,000 cars initially, which will soon rise to 40,000 units annually.
According to the Vietnam Automobile Manufacturers’ Association, in CY22 as many as 325,270 cars were sold in the country, making it Southeast Asia’s fourth-largest car market, after Indonesia, Malaysia and Thailand.
“Apart from that, we are looking at growing numbers in India, exports consolidation into South America, and exports opportunities in the Middle East and North Africa,” Arora said.
As far as India operations are concerned, SAVWIPL (which oversees Indian operations of Skoda, Volkswagen, Audi, Porsche and Lamborghini) sold 134,667 cars in 2022, of which 33,397 cars were exported and 101,270 were sold in the domestic market. “We registered a growth of 85-86% for the overall group sales in 2022,” Arora said. “In fact, in December 2022, we ended with almost 4% market share and the overall market gain was close to 1% (the group’s total market share stood at 2.67% in 2022). This year, we want to grow faster than the market. Last year the automotive industry recorded very high growth — in the range of 22-23% — and this year though it may not be that high, we will definitely try to achieve double digit growth.”
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Brand wise, the Skoda brand grew 125% in India in 2022 (53,721 cars sold), and the Volkswagen brand saw 58% growth, albeit on a very low base of 2021.
SAVWIPL is also testing some electric cars on Indian roads and may launch these in India later this year. “We have brought the Skoda Enyaq and Volkswagen ID.4 and are testing these on Indian roads,” he said. “We are extremely satisfied with the feedback.”
SAVWIPL is following a top-down approach in electric mobility, ie first importing electric cars, and then looking at how and when to assemble those cars locally. In 2021, the group’s luxury brand Audi had launched five electric car models under the e-tron sub-brand and Porsche had launched the Taycan electric supercar, both as CBU imports.
