Skoda will not give up on the small car segment

Kamal Basu: The Superb stands for everything we embody. It has created many benchmarks and this facelift, we think, will continue to build upon these benchmarks and stretch them forward. There are a few things that worked from the start for the Superb like space - cabin and boot; it was great value for money even at its price point thanks to the amount of equipment and features we packed in. The Superb is a car which has always drawn inspiration from segments above when it comes to luxury. 

ZW: Who are you competing with, with the Superb?

KB: The numbers for what we saw as our traditional competitors are very small. So in that sense the competition for the Superb is virtually non-existent. However, what encroaching into the Superb's space are products from what we call 'badge brands'. These luxury brands (read Audi, BMW and Mercedes) are slowly creeping into our place. And we see these as the Superb’s true competition. A few years back the price differential between these brands and the Superb was significant; almost Rs 10 lakh or thereabouts. But today, this price differential has come down significantly. Our endeavour now is to take these 'badge brands' head-on by making the Superb an even better proposition.

ZW: Your plans for the small car space…

KB: Brands or products sustain on volumes. This is one of the reasons why we decided to discontinue the Fabia and revaluate the whole small car positioning. If a mass market car doesn’t sell 30,000-40,000 units a year, it isn’t viable. And to sell this sort of number, we need a higher level of localisation. We need a different car, actually, compared to what we were offering in the Fabia. The Fabia was the best value for money in the market, but, as a company we were losing money on every Fabia we sold. So, in a sense whoever was buying a Fabia was getting a great deal because they were buying it at a price lower than it cost the company to make. But, we weren’t in the business of charity, so we had to take it off the market. But, the small car segment isn’t a space we would like to give up on. It’s a question of revaluating the space and coming back with the right product. And the Indian customer is pretty cut throat; he doesn’t really give you a second chance, especially when there are so many options. And the options are only increasing with the sub-4m sedan segment encroaching into this space as well. What we need now is a star, a jewel in the crown for us to succeed in the small car segment.

ZW: Tell us about the upcoming Rapid Ultima.

KB: The Ultima for the Rapid is just a working title and not a new badge. Today discounting is quite prevalent. And as we know discounting is a downward spiral. You can keep doing it till your pockets permit but in the end the one with the deepest pocket will remain standing. And this is not the path we want to go down. So, our challenge was to make sure that we get the audiences and not because of the discounts but because of the value we offer in the car. So, we have stopped discounting and have used that money towards product enhancement and delivering better finance schemes. Today consumer values features more than cash discounts. When he is going out to buy a car that costs Rs 10 lakh, Rs 30,000-40,000 discount is not going to sway him unless he sees value in the car. The Ultima is a step towards enhancing features in our cars by going down the accessory route and creating these special models which will be put into the market very soon.

ZW: What went wrong with the Yeti?

KB: The Yeti, personally speaking, is one of the best products from our stable. It’s a car that we swear by. But, we got completely butchered by the rupee exchange rate hike and it now puts the Yeti in a segment where SUV sales aren’t very high. Given the features the Yeti comes with, it is impossible to put it in the sub-15 lakh bracket. Secondly, in India, when you talk SUVs people first thing size, they see themselves sitting a level higher than regular sedans and it should give a sense of power when you hold the steering wheel. So they are looking for a bull terrier, so to speak. The Yeti is a compact SUV; it was never designed to be a tough, monstrous, bull terrier type of a car for the road. Although I am confident it will take any SUV hands down in performance on and off-road. The only thing that doesn’t work for it is its size. This is one of the things that the Yeti has going against it. But, I would imagine it’s a positioning fallacy at our end as well. We could have positioned the Yeti as a city centric compact SUV meant for driving around the city jungle because even though people buy the larger SUVs, very few actually take it off-road or into the mountains. It’s when they are driving around in the city or when they want to park that they feel inconvenienced. The Yeti has a huge advantage in this space. 

ZW: What can we expect from Skoda in 2014-15?

KB: We have been working very hard at customer satisfaction because the perception that Skoda’s service isn’t up to the mark has hurt us badly. We have had very good products, but because the service faltered, buyers started shying away from us. So, our focus over the next two years is to correct this imagery. We have embarked on a detailed plan to take on this issue head-on. We are now doing extensive training of our people, even at the dealer end and we have got in a new set of people too in this space. You will also see some aggressive initiatives as well in after sales. So there will be some significant changes happening in that space. In terms of products, we will continue to build upon the Octavia and the Superb’s success, make the Rapid a better value proposition, and there will be the facelifted Yeti as well.