Stuck in Neutral: Renault, VW, Skoda’s India Dreams Face Traffic Jam

Image Source: HT Auto

European automotive giants Renault, Volkswagen, and Skoda are grappling with a steady decline in their presence in the Indian market, with tough competition, shifting consumer patterns, and regulatory issues causing a steady dent in their share. Latest industry reports indicate that all three brands have seen sales stagnate or fall for three years running despite attempts to restructure their approach.

Sales Slide Continues:

Renault sales declined to 37,900 units during FY2024-25, which decreased drastically from 45,439 in FY2023-24 and almost touched half from 78,926 in FY2022-23.
Skoda managed a modest increase to 44,866 units in FY2024-25 from 44,522 units in FY2023-24 but still well below its 2022-23 level of 52,269 units.
Volkswagen recorded 42,230 units in FY2024-25 compared to 43,197 in FY2023-24 and modestly up from 41,263 in FY2022-23.

Strategic Mistakes:

All three brands began with sedans (Vento, Rapid, Scala) and lost out on India's SUV boom. This limited their appeal as Indian consumers moved firmly towards compact and mid-size SUVs.

Product and Network Constraints:

Sluggish update cycles on merchandise and a limited selection of new releases have caused lineups to appear stagnant.
Distribution and service networks remain urban-focused with weak penetration in Tier-2 and Tier-3 cities where homegrown brands like Maruti Suzuki, Tata, and Mahindra are dominant.

Tax Regime Issues:

India's GST system is strongly tilted towards sub-4-metre, low-engine vehicles with less taxation, a segment dominated by Japanese and Korean players. European players, who traditionally sold big cars, incur more duties, and thus their cars become less price-competitive.

Asian and Domestic Competitors Pick Up Steam:

Indian and Asian originals have surpassed European brands by launching products frequently, with high localization, and early introduction of alternative fuels (CNG, hybrids, EVs).

Indicators of Course Adjustment:

Skoda keeps its recent entry of the Kylaq, a sub-4-metre SUV for Indian buyers, as a symbol of strategic transformation. Experts believe that the future growth of these brands may lie in focusing on cost-competitive under-4-metre platforms and leveraging India for exports and R&D.

Though they have their image and popularity worldwide, Renault, Volkswagen, and Skoda have an uphill task in India unless they are able to adapt fast with the changing market patterns and consumer preferences.

Source: Business Standard, Economic Times, Times Now, NewsBytes, Financial Express.