Skoda makes Vietnam debut, India-made Kushaq and Slavia kits to be exported

Skoda Auto has now made its debut in Vietnam. The company will begin operations here by importing the Skoda Kodiaq and Karoq in CBU form starting September 25. But this is also an important development for Skoda Auto Volkswagen India, its Indian arm. The Skoda Kushaq in late 2024 and then the Slavia in early 2025 will be exported in CKD kits from its facility in Chakan near Pune to Vietnam. Post 2025, the Skoda Enyaq EV is also being considered for launch

Skoda Kushaq, Slavia export to Vietnam

This is the first instance of a carmaker exporting cars from India in kit form, showing a notable maturing of the Indian auto manufacturing sector. Skoda Auto Volkswagen India has already begun work on a separate production line for these models, in keeping with the brand India 2.0 goals of making India one of its global manufacturing hubs, having already exported over 30,000 units of its India 2.0 offerings. The company plans to use its entry into Vietnam as a toehold to tap into the lucrative ASEAN region where it has little presence now.

India's geographic proximity to Vietnam has also made it easy for this arrangement to make sense. The shorter distances and broadly similar market dynamics will help Skoda adapt to the Vietnamese market quickly. Although unlike India, Skoda cars will be assembled here by the TC Group, its distribution partner in a facility still under construction. This facility is expected to be able to assemble over 27,000 cars annually by 2027 to service the ASEAN region.

The Kushaq and Slavia models should be largely similar to the ones present in India, although some developmental work has gone on to make them a better fit for the Vietnamese market aside from the change to a left-hand-drive configuration.

Vietnam auto industry, Vietnam-spec Skoda Kodiaq, Skoda Karoq

The TC Group is a large Vietnamese organization that already assembles and distributes Hyundai's passenger and commercial vehicles in the country. It also has a presence in real estate and hospitality.

The auto industry in Vietnam shows a lot of promise on paper, and some parallels can also be drawn with the Indian market. It is the fourth-largest carmaker in Southeast Asia. Over 1,06,000 vehicles have been sold in 2023 but there are just 38 vehicles for every 1,000 people(India has over 225). This market is dominated by Japanese and Korean brands like Toyota and Hyundai-Kia. SUVs, good design and a long list of features are appreciated by car buyers much like in India. There is a large, young labour force also available to run such auto manufacturing units. Czechia and Vietnam also have strong cultural connections, which has made it easier for this country to be made the hub of these operations.

A key difference from India is that CBU imports attract varying degrees of duties dependent on the country, unlike the fixed levy in India. It currently stands at 49 per cent for the European Union. Further, CKD units are not charged any duties which seems to have led to carmakers tying up with local firms for assembly and distribution functions. For reference, the Karoq's prices start from the equivalent of Rs 34.06 lakh and the Kodiaq is priced from Rs 40.54 lakh, ex-showroom, in Vietnam. The Skoda Karoq is being launched in its facelifted form  with a 150PS/250 Nm turbo-petrol DCT powertrain. The base Skoda Kodiaq gets this same engine with the higher-spec version getting the 2.0-litre turbo with 190PS/320 Nm and AWD.

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