Volkswagen set to reshuffle brands in India; Skoda’s to become cheaper

German automaker Volkswagen has decided to reposition its group brands in India, so as to further distinguish the three from each other. The group consists of the following brands – Audi, Volkswagen and Skoda – in the Indian market. While Audi and Volkswagen remain to have a premium market positioning, the Czech brand, Skoda, will now contribute to the more affordable end of the automobile sector.

Volkswagen has taken this step in-order to align the Skoda brand with its global positioning.  Skoda, which started its operations in India ten years back carries a significantly premium reputation when compared to Volkswagen. Globally however, things are the other way round. Skoda’s are considered to be more affordable versions of VW’s. By pushing the Czech brand down the ladder, VW is indirectly creating more room for its products in the Indian market.

“It’s a question of how different brands are placed against themselves in the market. Skoda has a quite high position (in India). In the group, Skoda is little bit positioned under Volkswagen. So, we are on the way to make a correction,” Volkswagen Group Board Member and Executive Vice President Ulrich Hackenberg said.

Volkswagen has already missed out on a lot of its potential, due to the reversed positioning in India. The fear of one product cannibalising into the sales of another, has forced the brand to take a lot of cost-cutting decisions in the past. In addition, the German auto-giant has been holding-back on its future investments too. The launch of the UP! Hatchback had to be postponed to an unknown date, for similar reasons. On the other hand, Audi India has been posting a positive growth and may soon overthrow BMW to clinch the topmost position in the Indian luxury market.

With the new market strategy in place, Skoda’s in the future will be considerably cheaper than what they sell for today. On the flipside, the cars will miss out on some of the equipment that we see on the current cars. Irrespective of the market positioning, the biggest challenge that lies ahead of the brand is to get its after-sales service back on track. With the advent of social-media, this is one area that could cost the VW-group all the reputation it has earned over the years.

Info source: ET