“Don’t Want To Be Maruti”: Why Volkswagen Isn’t Following Skoda Into India’s Sub-4M SUV Market

Come 2025, the Volkswagen Group will once again have a sub-Rs 10 lakh vehicle on offer in India through Skoda Auto, which will introduce a sub-compact SUV. The new Skoda cars introduced under the India 2.0 programme (Kushaq and Slavia) also spawned Volkswagen derivatives (Taigun and Virtus), but this time, Skoda is set to go it alone with its Tata Nexon rival, with Volkswagen having opted to not re-enter the sub-Rs 10 lakh passenger vehicle market. At the 2024 Volkswagen India annual brand conference, a senior company official all but confirmed the brand’s decision to not introduce a sub-4m SUV, saying the company does not aspire to be a volume-focused firm like Maruti Suzuki.

“[Skoda and Volkswagen India] share platforms and similar thought processes, but every brand is individual. We have our own positioning strategy and segments we want to focus on”, Volkswagen India brand director Ashish Gupta told the media on the sidelines of the event, when asked about the possibility of Volkswagen introducing a sub-four metre SUV.

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Skoda has confirmed its next key model for India will be a sub-4m SUV, but it will not spawn a Volkswagen derivative.

Citing how the average selling price of Volkswagen India’s cars has more than doubled in the last few years, Gupta said the brand has moved further upmarket, and that sustainability of the business is more important than focusing on increasing volumes.

“We have successfully repositioned the Volkswagen brand. Whether it is through the products we have introduced, our communication, experience at our dealerships or cost of ownership, we have moved the brand upwards, and we’d like to keep it there because that is what gives us sustainability. Earlier, we used to operate at an average price point of Rs 7 lakh with the Polo and Vento. Now, our average price point is Rs 16 lakh. Our aspiration is not to be a Maruti [Suzuki] and we can never be Maruti or Hyundai. I believe we have found our space and we want to stay true to it”, said Gupta.

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The company's average selling price has more than doubled in recent years with the introduction of the Taigun and Virtus.

The brand has previously confirmed that while it is theoretically possible to re-introduce the Polo on the India-specific MQB A0 IN architecture, the costs involved would be too high for it to be feasible. Gupta pointed out that India’s hatchback market continues to shrink, and that the potential removal of the sub-four metre rule (along with associated excise benefits) in the future could seriously impact prospects of sub-four metre hatches, sedans and SUVs.

The VW Ameo, which was tailored to meet India's sub-four metre requirement, was a sales flop.

Volkswagen exited the sub-Rs 10 lakh market with the discontinuation of the Polo and Vento in 2022. The company’s most recent attempt to succeed in the sub-four metre segment was the Maruti Suzuki Dzire-rivalling Ameo sedan. Built at an investment exceeding Rs 720 crore, the Ameo, launched in 2016, failed to captivate Indian car buyers and was discontinued within four years of its debut. As things stand, the Virtus is likely to remain the entry point to Volkswagen ownership in India, at least for the foreseeable future.

Also Read: Skoda Sub-4 Metre SUV Confirmed For 2025 Launch In India

Skoda’s upcoming subcompact SUV is expected to help the company achieve sales of 1 lakh passenger vehicles within the first year of its launch, also doubling its market share in the same year. Skoda is setting up a separate production line for the subcompact SUV at its manufacturing facility near Pune. The SUV is likely to come with a 1.0-litre TSI petrol engine, and will go up against the Maruti Suzuki Brezza, Tata Nexon, Kia Sonet and Hyundai Venue.