Will Skoda's New SUV Kylaq Make It big?

The company is eyeing sales of 8,000 units per month for the Kylaq, which starts at Rs 7.89 lakh (ex-showroom) and boasts 96 per cent localisation.

Czech automobile (auto) maker Skoda Auto India, which has been in the Indian auto market for 25 years, is now targeting higher volumes, a 3 per cent market share, and better profitability with its locally developed compact sport utility vehicle, Kylaq.

The carmaker has been selling 2,500–3,500 cars per month in India (including models like the Kushaq, Kodiaq, Slavia, and Superb).

With the Kylaq -- whose bookings began recently and deliveries start in January -- Skoda plans to change this dynamic.

According to Petr Janeba, brand director, Skoda Auto India, the company is eyeing sales of 8,000 units per month for the Kylaq, which starts at Rs 7.89 lakh (ex-showroom) and boasts 96 per cent localisation.

“We get more than 160,000 inquiries from different channels,” Janeba said, adding that Skoda expects Kylaq sales to reach 8,000 units per month.

Skoda currently can manufacture 100,000 Kylaqs annually. Janeba said that the company expects to sell 80,000 units a year.

“We hope to reach this number by 2026, but it could happen as early as 2025 due to heavy investments in our network, with 100 additional touchpoints. These will include Tier-II and Tier-III cities, apart from metro areas where we are already established,” he said.

“We are targeting annual volumes between 60,000 and 100,000 units for the Kylaq,” he added.

“If we reach 80,000 units next year, combined with sales from our other models, we will nearly treble Skoda's volumes in India. With the Kylaq, we're entering a new era, aiming for a 3 per cent market share. Having been in India for 25 years, Kylaq is one of the biggest enablers for this step towards higher volumes and market breadth,” Janeba said.

As it pivots towards targeting the volume segment consumer in India, Skoda is addressing a common concern: the high cost of maintenance.

It is offering maintenance for 24 paise per kilometre (km) for the Kylaq over a five-year period (including three years of free service). Janeba claimed competitors' maintenance costs are around 45–50 paise per km.

The Kylaq could be a game-changer for Skoda Auto India, which saw profits decline 69 per cent year-on-year in 2023-24 to Rs 95.9 crore, despite an 11 per cent increase in revenue, according to Capitaline data.

“Kylaq will definitely bring us volumes. The model is profitable and will improve scale, supporting the profitability of our other models,” Janeba told Business Standard.

“Whatever extra we earn, we reinvest in new product development. We're not targeting huge profits; instead, we prefer to invest for the future,” he added.

Skoda, which uses India as a manufacturing base for the Association of Southeast Asian Nations, is prioritising the domestic market for the Kylaq.

It will not export the right-hand-drive model until demand in India is met, with exports expected to start no earlier than September 2025.

Amid scrutiny over an alleged Customs duty fraud involving the Skoda-Volkswagen group, the company is focusing on deeply localised, high-volume cars.

It also plans to localize electric vehicle (EV) assembly in India by 2027, aligning with the government's push for EV adoption.

Skoda currently has an annual capacity of 255,000 units, which can increase to 270,000. However, EV production would require additional capacity, particularly in the paint shop.

Janeba hinted at upcoming offerings, including a seven-seater Kushaq successor, a locally built Kodiaq, and completely built units.

“We are a European brand, and many Indian customers expect European quality similar to what they see in Mercedes or BMW,” he said.

Feature Presentation: Rajesh Alva/Rediff.com