Road ahead will be a tough one for Skoda

Last year Shridhan Rokade, a Pune resident who had booked a Skoda Rapid, dragged the Czech company to the District Consumer Disputes Redressal Forum after it failed to deliver the car within the time-frame committed to him.

The consumer forum held the company and the dealer concerned responsible for deficiency in service, directing them to pay compensation, interest and cost of proceedings to the petitioner, who had made full payment of the sedan beforehand.

Meanwhile, a owner of Skoda Superb approached a lawyer after he failed to convince the dealer about the clutch wearing out in less than six months.

It is supposed to have lasted at least six years.

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One of the dozen marques owned by Europe’s largest automaker, Volkswagen, Skoda was hit hard by botched-up delivery schedules and service in India.

Waiting periods got longer even as its plant in Aurangabad operated at half its installed capacity.

The poor show dragged the Skoda brand down.

Skoda had topped the JD Power customer satisfaction index in 2008 but found itself at the tenth spot in 2013’s study.

The lack of demand forced the company to pull out two models, Fabia and Laura, the former being targeted at a voluminous segment consisting of one of Maruti Suzuki’s best-sellers, the Swift.

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Former Renault India Head Sudhir Rao, who was appointed managing director of SkodaAuto India two years ago, had to get the house in order.

As per the mandate given by Skoda headquarters, consumer satisfaction needed urgent attention.

“We are having weekly review meetings of HR, purchasing, product planning, finance, engineering, servicing which never used to happen before.

“I can make so many decisions than no other MD could before,” says Rao.

After all, the lack of coordination between different verticals cost it volumes for its new Octavia, a brand which re-entered India after three years.

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As many as 30 per cent of the buyers cancelled their bookings when they could not get delivery of the car before March 31, 2014.

Rao now has a sense of customer bookings.

“I decided to go deeper into sales, service and marketing. I am looking at every order, every (car) booking.

“I am fixing the process personally”, says Rao, who was appointed chairman of the company, allowing him greater control.

A budget brand in Europe, Skoda established itself as a premium brand in India, purely by accident, when it debuted in 2001.

The lack of rivals for its flagship Octavia, which operated in the Rs 8-10 lakh (800,000-1 million) bracket meant a premium positioning and a runaway success.

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“We did not have to try to sell cars too hard back then”, says a SkodaAuto India official.

Thereafter, the company lost its way as it failed to evolve, even as Maruti Suzuki and Hyundai that control more than 60 per cent of the market, carpet-bombed with a series of top-sellers such as Alto, Swift, Dzire, i10, i20 and Verna.

According to data by SIAM, sales plummeted to 19,959 units last year from 34,089 units sold in 2011-12, which was also one of the better years for Skoda.

Skoda’s bid to innovate by being the first company to sell a car (the Fabia) onlin did not meet with success, and in fact, aggravated the problem.

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The Fabia, which was sold at 10 per cent discount at dealerships, was further discounted online, rapidly eroding the brand value, which took its toll on the parent brand, Skoda too.

Though Rao agrees that India was never the focus for Skoda’s growth a decade ago, the country, which is the second fastest-growing auto market in the world, is more significant now.

As a result it is revamping its product pipeline and gearing up to add a number of new models which will see their debut from 2015 onwards.

Early this year, it launched a face-lifted Superb which will be supplemented by the refurbished Yeti and Rapid in a few weeks.

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Next, there will be a compact sedan that will take on Maruti’s Dzire, Hyundai Xcent and Honda’s Amaze.

Further, there could be Skoda’s re-entry into the hatchback space, after the Fabia, but Rao cautions that it wont be ‘something which can bring huge volumes like the Alto’.

The company is keen on guarding its premium image in the market.

“The short-term focus is entirely on customer satisfaction and how to develop models that will not compromise Skoda’s DNA but will still allow me to do things cost-effectively and faster.

Next year, we would be ready with a proper product pipeline”, says Rao.

Rao has overhauled the entire back-end network of Skoda, including in the troubled area of service.

While it was usual for Skoda cars to remain at the service centre for at least two weeks (with some extending to 28 days) this is being brought down to three days.

“We have a policy that no car should be in Skoda dealership for more than three days,” says Rao.

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