Skoda CEO Emphasizes Need for Joint Ventures with Companies Boasting Strong Local Identity
MUMBAI: Skoda Auto plans to launch its first electric vehicle (EV) in India by 2028, according to CEO Klaus Zellmer. The company aims to enhance its market presence, having struggled to secure a position among the top three brands in sales despite being in India for over two decades. While Zellmer did not specify the model, sources indicate that the company is considering the electric SUV Peaq as a completely built unit (CBU).
Zellmer noted that the share of EVs in India could reach 15-20% by the end of the decade. He praised the government’s initiatives to reduce CO2 emissions but expressed concerns regarding the E20 fuel mandate’s impact on older vehicle models. He stated, “If I look at E20, our current cars are not a challenge but the older generation of cars then having to cope with a new way of firing them up is the bigger challenge.” He emphasized the need for sufficient lead time from the government to address these technical challenges.
Joint Venture Discussions
Skoda Auto is also in talks to establish a joint venture with a local partner, potentially involving JSW Group. This partnership could lead to significant investment in Skoda’s India operations, with JSW possibly acquiring a majority stake. Zellmer mentioned the necessity of a new business model to drive growth in India, aiming to position the country among Skoda’s top three global markets.
He stated, “We are looking for a potential partner to form a JV with a strong local entity. We have been discussing it for quite a long time.” The collaboration is expected to enhance local investments and localization efforts, with Zellmer asserting that “the real growth potential comes up from fully localising.”
Export Strategy
The joint venture will also focus on expanding export opportunities, particularly to European markets. Zellmer highlighted that the India-EU Free Trade Agreement (FTA) would facilitate this strategy by reducing trade barriers. Currently, Skoda exports vehicles made in India to markets including the Middle East, Vietnam, and Mexico.
Zellmer described India as the “new” China for Skoda, projecting a record sales target of 80,000 units for the year, driven by a growing base of young and affluent consumers. He noted that the recent GST cuts have positively impacted sales, helping to mitigate challenges arising from geopolitical tensions in West Asia.
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