By : RACHNA TYAGI
Not one to mince words, Gurpratap Boparai, Managing Director, Skoda Auto Volkswagen India Pvt Ltd., has no qualms about calling a spade a spade. In this interview, he talks to TURN OF SPEED about their hugely successful MQB A0 platform, the need to lower import duties, the group’s readiness to be a global EV leader, and the unfurling of their EV journey in India. Excerpts from the interview…
TOS: How are you coping with the semiconductor shortage?
GB: Everybody is affected and so is our group. Our group’s headquarters recognizes that we are in the middle of launches and so far, they have given us the allocation that we require.
TOS: So, you don’t see any hinderances?
GB: No, hinderances are there. Even with this allocation there are…since everything today is flying by air, there is no stock anywhere in the system, so one missed flight means immediate impact or one small breakdown for a couple of hours in the chip-manufacturing plant means shortage somewhere. Some plant, somewhere or the other will shut down. Those interruptions, disruptions will happen, but overall, for the year, at least for the newer cars we should be able to manage getting our requirement.
TOS: With no diesel engines and EVs yet to arrive on the scene from your stables, going ahead only with petrol engines, what does the road ahead look like?
GB: If you look at the mass segment, already most of those segments are without diesel. Sub four-meter is almost entirely without diesel, except two-three products. Over four meters, under 20 lakh, diesel is still there but [it is] decreasing and with Bharat Stage VI- Phase II, it is expected to drop further. The petrol [cars] that we have are not only really nice to drive but they are also very frugal, very fuel efficient. We feel that this is the right strategy. After Bharat Stage VI-Phase-II, the diesel, at least in this size of cars, will become quite small. For somebody selling 20,000 cars in that segment, maybe they can still afford to have diesel, but not for us.
TOS: Your plans to achieve 5% market share seems “ambitious” to many. In the current scenario, post-pandemic and with Indian economy still reviving, is it a realistic figure?
GB: We speak of 5% with Skoda and Volkswagen put together. I don’t think it’s too ambitious. If we look at some of the new entrants [they] already [have] 6% market share with two products, why shouldn’t we aim for 5%, why should it be difficult?
TOS: That means going forward, the 5% will not be inclusive of EVs?
GB: EVs are part of our plan but in insignificant volumes for now, in the short to medium term, but when we are into EVs, then our ambitions for the EV segment shares are significantly higher than 5%. We are poised to be a global leader in EVs, so it would be very unambitious of us not to aim for more than 5% and there we don’t really have the disadvantage of one dominant player so it is not going to be like that with the EVs.
TOS: What are the new export markets that you plan to tap into with your new offerings in the coming months? Will the exports be focused more on Asia?
GB: No, we will continue to serve the markets that we serve today. Maybe another five-six countries will get added. We already have enough countries that we serve. Asia, at least ASEAN market, requires local assembly, so, if we go that route, of course, it will be with some partner there. Fully built cars won’t make sense, because they will be too expensive. But currently we also sell in small volumes in Asia, all that will continue. But in terms of countries, I don’t think we’ll add too many. As recently as three-four years back, we were shipping cars to 65 countries, if I’m not mistaken. I don’t think we’ll cross that number.
TOS: Tell us about your much talked about and hugely successful MQB platform. What is usually the life of a platform and how many products can it spawn?
GB: A platform can spawn over a dozen products, if there is that kind of demand in those segments. But if you see MQB A0, we would be close to a dozen products globally on this platform, if not more. That’s not a limitation. It is more of what the market wants. For example, you can do an MPV on this platform but I don’t see us doing an MPV, at least not right now, because it is not a segment that is growing. Other than the high end of the MPV with the bigger cars, the smaller MPVs have had limited success in India.
TOS: You’ve joined the chorus in asking the Government to lower import duties. You also mentioned that we need to open up our markets for everyone. Can you elaborate?
GB: If you look at other major auto producing countries, their duty rates are significantly lower than ours. My joining the “chorus” was in the context of EVs but I think it should be done across the spectrum. Why for the EVs in particular? Because we’re at a stage that where every car that comes in, will help develop and build the ecosystem. Today, companies are loathe to set up charging stations because there is hardly anyone who goes to charge. There are not enough cars to use the charging stations. Recently, I was reading about how a charging station that should be doing five charges a day to break-even does 1.1 or 1.2 in most of their charging stations. Right now, we should focus on getting as many cars into the country… that will help. Also, the viability of the charging network, it is a bit of a chicken and egg situation; somebody has to break it. The high-end cars, and we’re talking about small volumes, they also help in making the product desirable. The acceptance of a new kind of product is much likely to happen in those segments and then it trickles down. So, it will help the overall EV demand if there are cars like that available. And 25% duty disadvantage is enough. Why would anybody pay 25% more than an equivalent product and it will be more than 25% because the cost of bringing the vehicle here is more than an equivalent product produced here. We are some time away from when EVs will become mass in India and till then, we should do everything to encourage every EV whether it is coming from outside or whether it is coming from here, and then later on you can again change your duty structure. But for IC engine cars there is no rationale for protecting the industry. It doesn’t need protection anymore. If you speak to some of the industry veterans who are no longer speaking on behalf of their companies, they will tell you that there is no rationale today. Many of our FTAs (Free Trade Agreements) don’t get concluded because the auto industry is intransigent when it comes to duties on imports. All this talk of cheap imports flooding in, is overstated. [If] you want to keep the real cheap imports out, there are other barriers, there are other means to discourage those, but FTAs are between nations or trading blocks and you have that with them. You don’t extend that to everyone. You have an FTA with EU and NAFTA (North American Free Trade Agreement) and reduce duties for them if you don’t want to do an overall reduction, but it is required.
TOS: What is the group’s readiness in terms of EVs?
GB: If there is any group that is ready for EVs, it is us.
TOS: In India…
GB: When the technology is available, localizing it is only a matter of scale, once you have the scale, you will localize but the technology is available, the know-how is available, so, after that, industrialization is 2.5-3 years, depending on what route you want to take. It can be even shorter if you start with the assembly operation.
TOS: How do you see the EV journey for the group unfurling in India?
GB: For us, it has started now with the e-tron and it will be like that – top down. Next step would be to assemble EVs here and then the final step would be to have full local manufacturing. That’s how we’re going to proceed. Within this decade we see ourselves making EVs in India. Also….Just about everyone has expressed a desire from the oil ministry to other ministries to minister of road transport that there should be a charging point at every petrol pump or atleast at 50,000 of them. If we continue with those slow chargers, it is going to be of no use at a petrol pump. We can’t have just one car parked there forever. It has to be fast charging and any facility at the petrol pump or the highway has to be the 30-40 minute charging kind of facility otherwise, it will be of no use. The only person, I see charging at the pump is somebody who lives next door, who buys an EV, and parks it there at night. I don’t see any other way in which they’ll serve the purpose, unless they’re fast chargers. Similarly, also on the highways, there should only be fast chargers. It is not easy there because you require a very high voltage. With a normal electricity connection that you get in the cities, it is difficult to run those. We tried to put those chargers at Audi dealerships, but they all require industrial connections. Can’t do it with normal electricity connections. All the slow charging that you want to do, you can do at home or office block, but not in public. All public chargers have to be fast chargers unless they’re dedicated to a taxi aggregator, etc, then they can be kept overnight or during the day, depends on what your business is. I don’t think we have any of those fast chargers yet in the country. It’s a fairly complex thing, it even requires a cooling tower because it produces so much heat, the cables, etc, and all need to be cooled. I don’t think anybody has installed that kind of a charger.
TOS: What’s happening at your Technology Center in Pune?
GB: We have taken the first step for this project, for these four cars. A lot of the engineering work happened in India together with our engineering center and service providers. This we intend scaling up in the future. Also, doing work for other regions, the company – globally, other projects, which most of the other companies are also doing. Our focus is going to be not just the software aspects of it but also the core vehicle component development. We need to get there to do much more but I think we made a good start.
TOS: How does Skoda and VW plan to compete on the tech front with the Koreans and the Japanese offering a zillion things on their cars?
GB: We’ve got many of those zillion things ourselves. I won’t say we are behind in the game. [However], there are certain things that we won’t do, as a matter of principle. We will not provide our customers with the facility to sit in their office and start their car’s air conditioner to cool the car down. It is irresponsible. We will not do it. Things like that we will not do, it is against the group’s policy. Other things that the customer wants, [such as] connectivity, voice assistant, we’ll do. I won’t get into aspects such as “we’ve spoilt this generation, etc, those kind of things,” I will say it is "environmentally irresponsible" when all it takes for you is to roll down the window, when you get into the car, put the ac on full blast and within a few seconds… It’s okay. We don’t have to get into a car that is already at 22 degrees Celsius. The human body can take a little bit of temperature variation. On the one hand, we are talking so much about the environment and then we spend two minutes idling the car. For what?
TOS: There are a lot of synergies between Volkswagen and Ford in Europe. Is there anything on the anvil in India at all?
TOS: Nothing? The MEB platform…
GB: The MEB platform, so far, Ford doesn’t have any plans to bring it to India, but if it comes then obviously there will be synergies between the two because it is our platform and scale is of paramount importance, so if it comes, then it could be something that we could work together on, but otherwise, nothing.
TOS: Skoda also has a mandate to build EVs based on ID.3 and ID.4 in Europe, how do you see that happening in India, when it eventually does happen?
GB: When it happens in India, it will happen the same way. When we get a platform, we will look to produce more than one brand and more than one model of it.
TOS: How content are you with the localization levels on the new products?
GB: I am happy on our localization levels. We can do a little bit more on our supplier’s localization levels. That’s where the next focus is shifting. We are way ahead than we were in the past and our localization levels, including our supplier’s localization levels, are at par with… I won’t say Maruti…but with others.
TOS: What have your learnings from the Indian customers been over the years?
GB: Generally, our customers are happy with the product. Then we get into issues of service, cost of service and there our customers have been unhappy with us. Those are areas that we focused on. All our brands have reduced spare parts costs in the last few years and with these new set of cars we’ll be absolutely in line with the competition. We’ve also worked hard to have sub-assemblies in spare parts. In Europe we’ve changed the whole unit but for these products we already define… out of this unit, these three sub-assemblies can be serviced, if you replace this, then the whole thing works, and that’s what we’re doing, because we want to reduce the cost of ownership for our customers. The other thing that we’ve done extensively is to run the cars in India in all kinds of road and weather conditions to establish the durability of what worked very well in Europe, but somehow, here would work very well, but would fail, at some point in time… in some cases. The robustness for our conditions has been worked upon.
TOS: Tell us about your upcoming Sedan…Slavia...
GB: We haven’t yet chosen or announced the name but we have registered three or four names. We will have sedans both from Skoda and from Volkswagen early next year and they will be really nice cars. Don’t expect them to be Rapid and Vento replacements, no, they’re bigger cars. But we’ll still be in the Honda City segment. Sedans are really nice to drive and these will be for people who love their sedans, love traditional cars but they’ll have all the modern features on them. Still… no remote start for the engine!