Why Renault, SKODA, and Volkswagen are struggling in India
What's the story
European mass-market car manufacturers such as Renault, Volkswagen, and SKODA are having a tough time expanding their footprint in India. The companies have seen a decline in sales over the last three fiscal years, according to data from JATO Dynamics. Renault's sales fell sharply from 45,439 units in 2023-2024 to just 37,900 units for the current fiscal year (2024-2025).
Sales dip
Numbers indicate tough times for these brands
SKODA's sales for 2024-2025 were slightly better at 44,866 units, up from 44,522 units in the previous year but down from a peak of 52,269 units in FY23. Meanwhile, Volkswagen witnessed a marginal decline in its sales figures. The company recorded sales of 42,230 units for FY25 as against last year's figure of 43,197 units and the previous year's tally of 41,263 units.
Market hurdles
Focus on sedans instead of SUVs
Ravi G Bhatia, President of JATO Dynamics India, told PTI that Renault, SKODA, and Volkswagen have been facing several challenges in India. He said these brands initially focused on sedans such as Vento, Rapid and Scala instead of tapping into the fast-growing SUV segment. They also lagged behind in refreshing their product lines with many models remaining unchanged for long periods.
Operational constraints
Limited network reach
Bhatia noted that these brands have a limited network reach, especially in Tier 2 and Tier 3 markets. This has prevented them from reaching a wider customer base. He added India's unique tax structure favors sub-4-meter vehicles with significantly lower levies, benefiting Japanese and South Korean OEMs known for affordable compact cars. European brands, which usually make bigger models, have struggled to offer competitive products within this framework.
Market dominance
Domestic OEMs have outperformed these brands
Bhatia highlighted that domestic OEMs such as Tata, Mahindra and Maruti Suzuki have gained market share through high localization, regular product launches, as well as early adoption of alternative fuel engines. He said these companies have outperformed their European counterparts who have lagged behind in electric and hybrid offerings. However, he added there are signs of course correction with SKODA recently launching the Kylaq, a subcompact SUV designed for India.