Now, Skoda Prefers Profit over Vol­umes

Czech car­maker’s lo­cal unit to fo­cus on build qual­ity, driv­abil­ity, safety

The Economic Times - - Business Of Brands - KE­TAN THAKKAR

The In­dian unit of Czech car­maker Skoda Auto is un­der­tak­ing an over­haul in or­der to re­po­si­tion it as a seller of pre­mium ve­hi­cles and as it tar­gets sus­tain­able prof­its over sales vol­ume.

The Volk­swa­gen group com­pany is look­ing to oc­cupy the space va­cated by Honda Mo­tor af­ter the Ja­panese ri­val stopped sell­ing its Civic and Ac­cord pre­mium sedans. In In­dia, Skoda has dis­con­tin­ued pro­duc­tion of its loss-mak­ing small car Fabia last year, and has di­verted ma­jor at­ten­tion to­wards the Oc­tavia and Su­perb to achieve lead­er­ship po­si­tion in the pre­mium end of the mid-size sedan space.

The par­ent com­pany has given a lot more re­spon­si­bil­ity to the lo­cal man­age­ment than be­fore to run the show. The re­vamp is be­ing led by Sud­hir Rao, man­ag­ing di­rec­tor of the In­dian unit.

“There is al­ways a de­bate rag­ing in­side, whether we move to the mass mar­ket or stay pre­mium,” Rao told ET. “Ini­tially the thought was to run be­hind the vol­umes, but it is now clear, we will not come down the perch of pre­mium-ness.”

Skoda will re­main an as­pi­ra­tional brand and never be a budget brand, Rao said. “While the In­dian mar­ket continues to be price-sen­si­tive, but with time, we are sure, people will value good build quali- ty, driv­abil­ity and safety.” While build qual­ity has been a strong point for Skoda in In­dia, poor af­ter-sales ser­vice has been its big­gest bug­bear. The com­pany wants to change that im­age. “We are try­ing to change the per­cep­tion that Skoda cars are ex­pen­sive to own, main­tain and ser­vice,” Rao said. Cus­tomer is­sues and sat­is­fac­tion have be­come top pri­or­ity and Skoda re­views pro­cesses and con­cerns ev­ery week with the pos­si­bil­ity of call­ing for emer­gency top-level meet­ings to re­solve cus­tomer grievances. It has also de­ployed more em­ploy­ees on the field to tackle cus­tomer prob­lems, people close to the com­pany said.

In 2012, due to un­avail­abil­ity of parts, Skoda had more than 1,500 cars at deal­er­ships for re­pair for al­most a month. That num­ber has now come down to less than 500. Re­peat re­pairs, which were very high at 30%, have shrunk to the sin­gle digit. Its in­ter­nal qual­ity drive is called Cus­tomer Re­ten­tion In­dex. “It has been con­sis­tently im­prov­ing,” Rao said. While the house-clean­ing process is un­der way, Skoda sales have taken a nose­dive in FY14, a year that wasn’t good for In­dia’s car mar­ket as high fuel and loan costs as well as weak con­sumer sen­ti­ment in a slow­ing econ­omy kept buy­ers away. At Skoda In­dia, sales in FY14 fell more than 30% to 19,959 units, the low­est in the past sev­eral years.

The re­vamp of Skoda’s In­dia strat­egy is be­ing led by Sud­hir Rao, MD of In­dian unit

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.