Skoda planning to phase out Fabia in India

Czech car maker Skoda Auto India has pulled the plug on its premium hatchback Fabia, as annual sales of the car hit a five-year low of 3,343 units in FY13. ET learns that another 2,200 units of Fabia hatchback are scheduled to be produced before the company finally stops the production of the car by August 31. Launched in 2008,Skoda Auto India sold about 45,000 units of Fabia so far in its six years in India, the monthly volumes of Fabia came down to 115 units in April 2013.

The spokesperson of Skoda Auto India confirmed the development. "Skoda is in the process of strengthening its model range and as a part of this process; Skoda is contemplating a pause in production of Fabia in India. Skoda's immediate focus is on strengthening its presence in the sedan segment with the upcoming launches in 2013/14," the spokesperson said.

The company will be re-launching the new Octavia model during festive season as the company focuses on Sedans to come back into the reckoning. Skoda Auto India posted a decline of 14.73% in sales in FY-13, having sold 29,067 units that included only 3,343 units of Fabia in the year. The small car hit its peak of about 15,000 units in financial year 2012, which was equal to monthly sales of Maruti Suzuki's Swift - the segment leader (Read : Skoda Fabia Road Test).

Experts say the car was hit by its pricing strategy of pegging it above the market leader Swift, forcing value conscious hatchback buyers to prefer other hatchbacks over it. The car is priced at Rs 50,000 premium of the segment leader Maruti Suzuki Swift.

Despite being in the market for almost 5-6 years, the localisation level was around 40-50 % only, making it an expensive proposition for company to sell the car at a profit. With volumes dwindling to 200-300 cars a month, Skoda was losing money on each car, according to an informed source.

According to Pradeep Saxena, ED at market research firm TNS Automotive, "Fabia did not feature in the choice set of small car buyer, because Skoda as a brand stands for big sedans in India. In addition, the product was priced at a market premium."

In order to deliver the right price and profitability, Skoda Auto did consider coming out with the highly-localised Fabia, but this step of discontinuing means, the plan has been put on hold for the time being.

As many as 5-6 high profile cars have been discontinued over the last 12 months Chevrolet discontinued its U-VA, Aveo and Optra, Honda Cars India pull the plug off executive sedan Civic and premium hatchback Jazz temporarily. And later in the year, Maruti Suzuki is expected to stop the production of A Star and Zen Estilo, which will give way to an all-new model.