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Rising input costs are scary, doing everything to keep them under control: Skoda Auto


Worried by the rising input costs due to the ongoing Russia-Ukraine war, Skoda Auto is taking all the possible steps to keep them under control, according to a senior company official.

Worried by the rising input costs due to the ongoing Russia-Ukraine war, Skoda Auto is taking all the possible steps to keep them under control, according to a senior company official.

Due to high input costs, original equipment manufacturers (OEMs) in the domestic market have already hiked the prices of their vehicles at least once in 2022. Skoda Auto had increased the prices of its vehicles in India by up to 3% in January.

The Russia-Ukraine war is pushing the prices of commodities used in the automobile industry even further. The prices of aluminium have risen by 48%, palladium by 38%, rhodium by 35%, platinum by 13%, rubber by 28% and copper by 15%, over their average prices in the second half of 2021.

“We are really doing everything we can to keep costs under control. Within the group and also in India on the ground, we continuously look at efficiency and check our costs, if we are able to pass as little as possible on to the customers,” Thomas Schafer, chief executive officer, Skoda Auto, told FE.

“But the rising input costs, on all dimensions, are scary. That’s why we hope the conflict in Ukraine stops soon. This is not helping the raw material and energy costs,” he added.

Fuelled by the performance of the Kushaq mid-size SUV, which was launched in India in June 2021, Skoda Auto’s sales in the country grew by 108.9% to 22,800 units in 2021. At present, the Czech car manufacturer sells sedans like the Slavia, the Octavia and the Superb, and SUVs like the Kushaq and the Kodiaq, in India.

On a global scale, Skoda Auto’s sales volumes declined by 12.6% to 878,200 units in 2021, impacted by the pandemic and semiconductor shortage.

“We are trying to ramp up our volume now. This has been affected a little bit by the supply chain issues globally. There are a couple of sub-suppliers that are giving us some trouble. But we will work on it in the first half of this year (2022),” Schafer said.

Under the India 2.0 project, in which Volkswagen Group invested 1 billion euros, Skoda Auto has launched the Kushaq and the Slavia, while Volkswagen Passenger Cars India has introduced the Taigun mid-size SUV and is preparing to drive the Virtus mid-size sedan in the market.

“The important part would be to have more models in the pipeline after wrapping up the four models under Volkswagen Group’s India 2.0 project. No clear decision has been taken on that yet,” Schafer said.

Although Skoda Auto did not give the sales volume it is targeting in India in 2022, Schafer noted that the company is ramping up production at its plants to the maximum capacity.

“We are going to export nearly 50,000 vehicles and the rest will go to the local market,” he said.




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