As it evaluates growth opportunities, Skoda Auto Volkswagen India (Skoda VW) is considering partnerships with local suppliers to participate more actively in product development.

"With the automotive world becoming increasingly software-driven, there are opportunities to collaborate with partners more extensively than in the past," Piyush Arora, Managing Director and CEO, stated in a recent interview with a local daily.

From this perspective, opportunities can be further leveraged and align with the company's strategy to develop additional products utilising Indian engineering capabilities. Numerous engineering suppliers are already integrated into the development process.

Volkswagen Group Digital Solutions (India) in Pune has expanded its workforce from approximately 1,000 employees in its initial years to nearly 4,000 today. While the majority are based in Pune, additional personnel operate from facilities in Gurugram and Bengaluru.

"There is potential for the Volkswagen Group to source more from India than at present," Arora added.

Participation in global programmes

Efforts are ongoing to enhance the engineering base at the Technology Centre in Pune, which has contributed to product development under the India 2.0 initiative. Skoda VW will explore opportunities for these engineers to participate in global programmes.

Arora stated that since India 2.0, during the development of the Kushaq and subsequent products, there has been increased integration of tool-manufacturing suppliers within India.

Skoda VW sources a substantial number of components from India for other group brands through Tier 1 and Tier 2 suppliers, which supply nearly 40 locations worldwide. "Opportunities exist for the Volkswagen Group to increase sourcing from India, and efforts are underway in this direction for multiple brands," he noted.

Approximately 25-30% of vehicles produced at the Chakan facility near Pune are exported. "The focus remains on the domestic market, and maintaining 25-30% exports is considered reasonable," he added.

Market developments

Arora observed that India has evolved over the past seven to eight years, during which Skoda VW has expanded operations. At the same time, customer expectations have shifted, with growing demand for additional features. "Meeting these expectations is a priority, while other requirements will be evaluated and addressed at the appropriate time," he stated.

Regarding the adoption of artificial intelligence (AI) within the company's Indian operations, initial steps are being taken, in line with the global group's objective to integrate AI across processes. "While AI will not replace people, those who do not utilise it risk being left behind. It is a tool to improve efficiency," he added.

Technology is expected to achieve broader adoption in the industry over time. "Efficiency improvements, including cost optimisation, are essential to remain competitive," Arora stated.

Revisiting India 2.0

The Volkswagen Group's India 2.0 programme, announced in 2018, was designed to strengthen the company's presence in India. Skoda Auto led the initiative.

The programme aimed to produce competitively priced Skoda and Volkswagen cars and SUVs on the MQB AO platform, designed for India and other emerging markets.

The leadership ensured collaboration between the brands. Lessons from the launch of the Kushaq were shared with the VW team preparing for the Taigun. "Internal rivalries exist to maintain alertness, but the brands act in unison," a senior executive stated.

Martin Jahn, Board Member, Sales & Marketing, Skoda Auto, observed, "The global situation is expected to remain turbulent this year. Careful monitoring of developments is necessary, and calmer conditions are anticipated next year."

Collaborative operations

Joint meetings between Skoda and Volkswagen addressed network challenges in smaller towns, where both brands shared workshops. While customer experiences remained brand-specific, backend operations were combined to ensure adequate representation and operational efficiency. This led to the adoption of the "Y solution," featuring two showrooms and a joint workshop, which reduced dealer overheads and optimised manpower management.

Skoda VW continues operations amid external factors, such as the ongoing Middle East conflict, which may affect overseas shipments and global fuel prices, posing challenges for automakers worldwide.