Skoda Auto India’s Managing Director Sudhir Rao is on a mission to turn around the fortunes of the struggling auto company in the Indian market. In a bid to eliminate the ‘loss-making’ mentality and garner a larger user base, Rao has set in motion a transformational process that aims at cutting costs, localising and launching products that are relevant for the Indian market. In an interview with Business Line , Rao explains the new game plan. Edited Excerpts.
What have you done to cut costs and improve Skoda’s India business over the last year?
We are clearly in a mission to reduce losses. For example, we have eliminated all discounts on products.
We also phased out the Fabia hatchback. We have consolidated our operations internally and have become much leaner, more efficient and we communicate a lot internally. We have focussed on quality of employees than volumes which has resulted in our workforce going down from around 400 people in the beginning of 2013 to less than 300 in 2014. We have also reduced our outlets in terms of numbers, but not the cities, as less number of outlets can still serve a whole city.
How do you plan to get back into the Indian auto market given that you are selling lesser cars than last year?
We are experimenting with a new strategy. The way we have developed products till now has not been very India-centric.
We are now working in a limited way to start with a very Indian approach and asking ourselves what all has to be changed in order to meet the demands of Indian customers. For example, if I am developing a fender, what is the kind of tooling that I would use and how much would it cost. If in the past, it was happening at an X amount, perhaps we can do it a fraction of that cost in India.
We are currently experimenting it on Rapid. We will have the answers in the next six to nine months. That will also bring down the products’ prices down.
How crucial is the success of this experiment?
It’s very crucial for us. My boss has told me there will be only two things that he will evaluate on me this year – customer satisfaction and the success of this experiment.
I have spent a lot on this and now we are in final ‘cooking’ stage. Our strategy for small cars is dependant on the success of this strategy.
Does this mean you are looking at going beyond the niche market that you addressed till now?
The market is going our way and it’s moving towards us. We have better quality and safety.
We are not looking for that sweet spot that compromises the car.
We are looking for sweet spot which is the same car but compromises on development (reduction in development cost). Most important for us in Skoda currently is the customer satisfaction.
Will you bring in the new Fabia this year after the global launch here? What are the new launches for this year?
The new Fabia is a new platform and will have new engine trims. The global launch is in October, but it will not come here simultaneously.
We will be launching the new Yeti around September and working around a facelift of Rapid, which will come after that.