Skoda Auto India is heading into FY27 on the back of its strongest-ever performance. Total sales reached 75,555 units in FY26, driven largely by the Kylaq, which contributed 49,089 units and accounted for over 80 per cent of the company’s utility vehicle volumes.

Speaking to businessline,Skoda Auto India, Brand Director Ashish Gupta said the company is now focused on building on this momentum, with ambitions of crossing 80,000 units in FY27, through a calibrated strategy to strengthen and diversify its portfolio, even as it navigates rising input costs linked to West Asia, prepares for its EV rollout by late FY27.

While Gupta had struck an optimistic note on demand at the start of the month, April data showed a broader cooling in the market. Skoda Auto Volkswagen India’s volumes declined to 8,862 units in April from 9,158 in March, a drop of around 3 per cent , according to Vahan data.

This compares favourably with the broader passenger vehicle market, which saw a sharper ~10 per cent decline during the month, indicating relative resilience. Skoda reports sales on a quarterly basis, and does not disclose monthly numbers; Vahan data is therefore indicative.

The Electrification Imperative

Electrification remains Skoda’s most structural challenge. With CAFE III norms kicking in from April 2027, Skoda enters FY27 without hybrids, CNG, or a finalised local EV roadmap, and the imperative is clear: localisation is essential to compete with domestic manufacturers and turn CAFE-compliant.

On the companys alignment with upcoming CAFE III norms. Gupta indicated that the framework is “workable” from the company’s standpoint, with multiple compliance levers available. Penalties, he said, are “there to make sure everyone finds a fair way to account them”, signalling confidence that Skoda can navigate the system rather than be penalised by it.

So what’s the interim plan?

Skoda is aligned in direction, but not on the timing. “We don’t intend to get into strong hybrids. Our volume play has to be in EVs,” Gupta said. “Definitely in FY27 I will bring some electric cars… but whether local or CBU, that is something we will have to see.” On imports, he was equally direct: “Bringing cars from our global portfolio right now doesn’t make sense.” That leaves Skoda in a telling gap, strategically clear, but not yet ready in execution.

Portfolio Playbook: Depth Over Breadth

Skoda’s FY26 performance has been anchored by the Kylaq, which now contributes nearly 60% of volumes. The sub-4-metre SUV has enabled the brand to expand meaningfully into the mass market, while the Kushaq, Slavia, and Kodiaq continue to underpin the broader portfolio.

FY27 will see 10 product actions, largely focused on refreshing an already young lineup, including Kylaq variants, a Kushaq facelift, a Slavia refresh, and premium halo models such as the Kodiaq RS and Octavia RS. “New models are launched only once in three to five years… the rest are product actions,” Gupta said.

The company frames this phase as one of “building trust and delivering excellence” , prioritising network expansion to 200 cities, deeper Tier 2/3 penetration, service accessibility, and lower ownership costs. The immediate focus is stabilisation: ensuring recent volume gains are sustained before the next phase of growth. The intent is deliberate scaling within a defined band, rather than chasing market share.

The Margin Trap: Costs Rising, Pricing Power Limited

Input cost pressures are building, even as headline oil prices remain below $100. Aluminium prices have surged, and imported components such as DSG transmission kits are becoming more expensive, a function of global supply dynamics, elevated logistics costs, and rising premiums as conditions around the Strait of Hormuz remain fluid.

For Skoda, the challenge is not just rising costs but limited pricing flexibility. “At the current point of time, we can absorb the cost pressures. Our effort is to ensure that these are not passed on to customers,” Gupta said, adding that any increases would move in line with the broader industry. These pressures, he emphasised, are market-wide rather than company-specific, and pricing actions, if they come, are likely to be synchronised across players.

The Price-Sensitive Indian Buyer

Fuel efficiency is re-entering the conversation, though not yet decisively. “For Skoda, it has always been the driving dynamics and European technology that draw the customers,” Gupta said, pointing to stable interest rates and broader affordability as supporting demand.

Buyers are weighing fuel costs against financing terms and upfront pricing, rather than making decisions on efficiency alone. Skoda maintains that its TSI engines deliver competitive efficiency, backed by ARAI figures and technologies such as Active Cylinder Technology, and disputes any structural disadvantage o strong hybrids, arguing its engines balance performance with real-world fuel economy.

The Segment White Space, and What Comes Next

Skoda is also navigating a structural gap in the ₹20–40 lakh segment, where affordability constraints have historically limited demand. While the space is often framed as an opportunity, Gupta’s read is more measured: the gap exists because of limited customer depth, not a lack of products.

FY27, as Gupta frames it, is about “building trust and delivering excellence”: stabilising volumes, expanding into Tier 2/3 markets, lowering ownership costs, improving service quality, and laying the groundwork for a local EV play. The real test of FY27 not whether Skoda can grow, but whether it can hold its ground if conditions turn.

Published on May 4, 2026