Despite a low sales position, India remains the second-most crucial market for the Volkswagen subsidiary.
Skoda Auto Volkswagen India has officially announced ‘progress’ in discussing the possibility of forming an equity partnership with an Indian company. In the potential deal, Volkswagen’s wholly-owned Indian affiliate aims to leverage its local collaborator’s sourcing, engineering, and procurement expertise, sharing costs, risks, and profits.
Although Skoda has not disclosed any name or specific time, CEO Klaus Zellmer told the press that the group’s future investment in India depends on the company’s final decision.
Zellmer further commented that domestic partners have local competencies and are closer to the market. Although Skoda is open to continuing its operations solo, the equity partnership is a lucrative step in the Indian market.
According to the Economic Times, the VW Group seeks partnerships in response to government initiatives promoting electric vehicles and stricter carbon emission regulations, necessitating investments.
Skoda holds less than 3% market share despite over two decades of presence in India’s competitive car market. In 2018, the Volkswagen Group disclosed a ₹1 billion investment in a project led by Skoda in India. The company identified India as its second most important market outside Europe amidst a cautious strategy in China and its recent withdrawal from Russia.
As revealed by Skoda, India will also serve as an export base for the ASEAN and Middle East regions for the group.
In addition to the company’s decision on the partnership, the Indian unit of Skoda is looking to include battery electric vehicles in its portfolio to meet CO2 limits ahead of advanced carbon emission regulations in India by 2027-28.
Zellmer claimed that Skoda Auto led India’s operations for the Volkswagen Group and its brands. He added that the company is constantly exploring new business opportunities and assessing different options to find the most effective way to execute its strategy in India’s rapidly changing market.
Looking forward to the EV growth, he emphasised the urgency due to the lengthy 36-month development cycle, stressing that there is no room for delay.
The Indian government is progressing towards implementing stricter regulations. Under the third phase of the Corporate Average Fuel Efficiency Norms (CAFE), formulated by the Bureau of Energy Efficiency, car manufacturers in India will be required to reduce carbon emissions by 33% within the next three years or risk penalties. These CAFE-3 regulations are scheduled to be enforced starting from April 2027.
