Skoda VW to plow $1 billion into ‘India 3.0’ drive

Skoda Auto Volkswagen India (SAVWIPL), which operates Skoda, VW, Audi, Porsche, and Lamborghini in India, has secured in‑principle approval from its German parent to invest around ₹10,000 crore (about $1.2 billion) under a new strategy—dubbed India 3.0—aimed at re‑establishing its foothold in the country’s fast‑growing premium utility vehicle space, The Economic Times reported.

Volkswagen Group, the German parent firm, has given the in-principle nod for the comeback plan, the report added, citing people aware of the development.

The auto maker is considering expanding operations and focusing on the fast-growing premium utility vehicle (UV) segment, including sport utility vehicles (SUVs) and electric vehicles (EVs).

SAVWIPL was formed in 2001, and the company became a consolidated entity in 2019 after the merger of Škoda Auto India Pvt. Ltd (SAIPL), Volkswagen India Pvt. Ltd (VWIPL), and Volkswagen Group Sales India Pvt. Ltd (NSC).

The SAVWIPL India 3.0 plan comes against the backdrop of challenges faced by the Volkswagen Group in India, which reported lower-than-expected sales from its current India 2.0 lineup—models such as Kushaq, Slavia, Taigun, and Virtus.

The ₹10,000-crore investment is expected to be deployed over five years starting in 2028, similar to the commitment made in 2018 under the India 2.0 initiative.

The ET report said SAVWIPL failed to secure a local manufacturing and technology partner and faced further hurdles due to tax demands from Indian authorities.

At the group level, Volkswagen suffered from factory closures and workforce reductions in Germany.

Moving away from its earlier strategy targeting volume models, under an upgraded plan called ‘India 3.0,’ it will focus on premium SUVs and MPVs in electric, hybrid, and internal combustion engine variants.

These new vehicles will be built on the CMP 21 platform, an affordable EV architecture created for India. This platform will produce a range of electric SUVs in the mid-size category (4.3 to 4.8 meters) the person aware of this development said.

Utility vehicles now account for 65% of total passenger vehicle sales in India indicating a sharp shift in consumer preference.

In an emailed response to Press Insider’s enquiry, SAVWIPL said, “India is a key market in Škoda Auto’s internationalisation plans. The company is leading the operation on behalf of the Volkswagen Group and its brands in the country.”

SAVWIPL said that to fully explore the country’s growth potential, the auto company is always considering new business opportunities and evaluating various options to ensure the best possible solution to implement its strategy in the highly dynamic Indian market.

SAVWIPL, however, declined to comment on market speculation while reaffirming the company’s commitment to delivering innovative mobility solutions that meet the evolving needs of Indian consumers.