Skoda to re-enter India's compact vehicle segment with help from Tata Motors

Czech automaker Skoda is reportedly planning to make a comeback in the compact vehicle segment in India. Skoda and its parent company Volkswagen signed a Memorandum of Understanding (MoU) for a long-term partnership with Tata Motors in March. Re-entry of Skoda in the small car segment has been prompted by this association.

Also read: Tata-Volkswagen-Skoda alliance: 6 facts you need to know

Skoda has plans to enter high-volume small car category with a mini-SUV and an entry sedan, in a joint product strategy with Tata Motors, reports ET Auto. Reports indicate Skoda may make use of Tata Motors' advanced modular platform (AMP) for the upcoming mass market models. AMP platform is a highly flexible platform and it can produce a variety of vehicle types at an affordable cost.

Skoda previously sold Fabia hatchback in India under 10 lakh. Launched in 2008, the company had sold about 45,000 units of Fabia in its six years in India. The monthly volumes of Fabia came down to 115 units in April 2013 due to low sales and high assembly cost. That eventually led to the discontinuation of the car.

Skoda is reportedly counting on Tata motors to return to the mass market following the discontinuation of Fabia. The Czech company can make use of Tata's AMP to set a competitive price for its upcoming small cars.

Going by the industry trend, the proposed Skoda mini-SUV is expected to take on the likes of Maruti Suzuki Vitara Brezza and Ford EcoSport. The entry sedan is likely to be a compact model rivaling Maruti Suzuki Dzire and Hyundai Xcent.

New Skoda models, rolled out in truck with Tata Motors, may arrive only in 2019. Meanwhile, the company independently plan to push volumes, said Sudhir Rao, MD of Skoda India. Skoda ended 2016 with sales of 13,370 units compared to 15,457 units sold in the previous year.