'So far our production is not affected. But every day the situation prolongs, it does bring risks in terms of shipments getting delayed.'.
Key Points
- Skoda Auto India expects to achieve 10-12 per cent volume sales growth in 2026, outperforming the broader passenger vehicle market.
- The ongoing conflict in West Asia poses risks to supply chains, potentially causing shipment delays and increased costs if components require airlifting.
- Skoda's Brand Director Ashish Gupta anticipates the broader Indian PV industry to grow by 4-5 per cent in 2026, normalising after a strong 2025.
- The proposed India–European Union FTA is expected to offer gradual and limited volume benefits for carmakers, primarily for vehicles above a €15,000 threshold.
- Skoda Auto India plans to expand its retail network to 350 touchpoints across 200 cities by 2026, enhancing its market reach.
Skoda Auto India expects to grow its volume sales by 10–12 per cent in 2026, outpacing the broader passenger vehicle (PV) market despite a high base created by its record performance last year, its Brand Director Ashish Gupta told Business Standard on Thursday.
The outlook comes even as the ongoing conflict in West Asia is impacting supply chains and demand sentiment.
"So far, our production is not affected. But every day the situation prolongs, it does bring risks in terms of shipments getting delayed," Gupta said, adding that rising crude oil prices could also weigh on consumer sentiment.
He flagged energy availability and logistics disruptions as key concerns if the crisis continues, observing that costs could rise if components need to be airlifted instead of shipped.
Navigating Market Dynamics and Geopolitical Risks
The automobile (auto) company had a record year in 2025, with sales more than doubling to 72,665 units from 35,166 units in 2024, driven largely by strong demand for the Kylaq sub-4-metre sport utility vehicle (SUV).
Gupta acknowledged that such sharp growth would be difficult to sustain.
"Last year was a blockbuster year for us with about 100 per cent growth... I know that that kind of growth is not possible to maintain," he said, while reiterating the company’s aim to stay ahead of industry growth.
For the broader industry, Gupta expects more moderate expansion in 2026. PV sales in India touched about 4.55 million units in 2025, and early indicators for 2026 remain strong, with January and February registering nearly 10 per cent year-on-year growth.
However, he expects the pace to normalise as the year progresses. "On a very high base of 2025, 4–5 per cent growth is what I expect the industry to end up with this year," he said, cautioning that geopolitical uncertainties could alter the outlook.
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Impact of India-EU Free Trade Agreement
On the proposed India-European Union free trade agreement (FTA), Gupta said the benefits for carmakers would be gradual and limited in terms of volumes.
Duty reductions would be spread over five years and apply only to vehicles above a minimum cost, insurance, and freight value of €15,000, which translates into ₹16–18 lakh.
"Beyond that price point, the Indian market anyway starts thinning out in terms of volume," he said, adding that while premium car sales could rise from current levels, they are unlikely to see exponential growth.
He also emphasised that the FTA should be seen as a two-way opportunity. While it could allow automakers to bring in global models, it may also make exports from India to Europe more viable over time as regulatory standards converge.
"It is a two-way trade that will help both economies," Gupta said, though he added that the company is yet to undertake a detailed analysis of export feasibility to Europe.
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Expansion and Product Strategy
Currently, Skoda Auto India exports completely knocked-down kits to Vietnam for local assembly and also ships vehicles to markets in West Asia.
The company is exploring further opportunities in neighbouring South Asian Association for Regional Cooperation countries such as Nepal and Sri Lanka, he said.
Skoda Auto India unveiled the facelifted Kushaq in January, marking the SUV’s first major mid-cycle update since its debut.
The model sits in the midsize (C-segment) SUV category in India and competes with rivals such as the Hyundai Creta, Kia Seltos, and Volkswagen Taigun in a highly competitive segment.
Skoda is continuing to expand its retail footprint in India. It increased its network from 240 touchpoints across 140–145 cities at the start of 2025 to 325 touchpoints in 183 cities by year-end, covering 82–83 per cent of the market.
In 2026, it plans to extend its presence to 200 cities with about 350 touchpoints, targeting incremental reach in smaller markets.
On February 28, Israel and the US carried out military strikes on Iran, triggering a wider conflict in West Asia. Iran responded with missile and drone attacks.
The conflict has disrupted key shipping routes, forced the closure of a large chunk of regional airspace, raised oil prices, and created risks for global trade and supply chains.
ALSO READ: Skoda to drive in more global models into India
Feature Presentation: Rajesh Alva/Rediff
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