Volkswagen and Skoda rework strategy to avoid business conflict

Tuesday 09 September 2014, 17:32 PM by

Chances of loosing business are strong for two top car-makers when they compete against each other in the same car segment. Among most well known alliance partners list, Volkswagen-Skoda has been known to share common car platforms and technological developments. The move meant to aid brands with equal growth prospects did not do much good as customers often saw a thin line or negligible difference between models. Cross badging activity has proved to be futile for Renault-Nissan alliance and they have decided not to continue with the practice in India. Reportedly, Volkswagen has also been considering a similar move.

Volkswagen group is reportedly working on a new product portfolio strategy that shall get into deeper differentiation of product sold by Skoda and Volkswagen in India. The company has been working on this strategy to prevent affecting each others sales. As for now, it is said that the upcoming Vento also shares some canny resemblance to Skoda's Rapid. Mahesh Kodumudi, managing director of Volkswagen India, said, “Going back in 2011, it was a growing market, people thought there was space for everybody to grow. But then we realized in the last two years that it was not the case. Going forward, that is the lesson learnt. We are rationalizing our brands much better now. We are doing much more homework and due diligence in the last one to one-and-half year. For future products, we are making sure we don't re-badge with some minor cosmetic changes. Badging of one as another and with prices overlapping each other is a sure recipe for cannibalization. We will stop doing that.”

Working on new guidelines, it can be said as is Volkswagen launches a hatchback Skoda may use the same platform but work on building a sedan. In the international market Volkswagen has been perceived as a premium brand than Skoda. But in the Indian market as Skoda made an early entry, it has earned premium tag for itself over Volkswagen here. Volkswagen Vento and Skoda Rapid have managed to rake up total sales of up to 34,067 units which was indeed lower than Vento's stand-alone sales in 2012.

Source: ET

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