Skoda has just entered the hotly contested sub-compact SUV segment with the new Kylaq, its third model based on the localised MQB A0 IN platform. A starting price of Rs 7.89 lakh (ex-showroom) is not only at par with the competition but there's a significant delta with its elder sibling the Kushaq, too, thanks to tax benefits. Given that the Kylaq shares its platform, powertrain options, tech and features with the Kushaq, it is positioned as a better value offering. This will no doubt draw buyers away from its larger sibling.
Speaking to Autocar India on the sidelines of the Kylaq's launch, Petr Janeba, Skoda India brand director, acknowledged this by saying, “There can be some downgraders from the Kushaq. Someone who does not need the space and is more price sensitive will go for the Kylaq because the rest of the technology and package are all there.”
Kylaq will add to scale and lower costs
However, the Kylaq cannibalising Kushaq’s sales is a win-win situation for the Czech brand. Janeba explains, “Giving customers the technology and features from a higher segment is a win for them. For the brand, the win is that we increase our scale as its shares the platform with the Kushaq and we are also able to localise deeper. This not only allows us to reach a more competitive cost level but also give customers a better value proposition in terms of cost of ownership.” He adds, “It is an economic rule that within the brand, you have the biggest cannibalisation.”
With nearly a dozen offerings in the sub-4m SUV space, competition is rather fierce in this segment. It is also particularly difficult to have high profit margins because of the price sensitivity of this category. However, given the sheer volume, Skoda is confident there’s potential to grow even further, particularly with buyers wanting to upgrade from the hatchback segment (think Skoda Fabia/VW Polo owners).
“I believe we can even grow the segment [with this car], not only because we bring some buyers from the higher segment but there will also be buyers who have always wanted a Skoda, but didn’t have a product in this category,” says Janeba. “We will steal some buyers from our competitors and also some upgraders from the hatchback category.”
Kushaq facelift due in 2025 to further set it apart
That said, the sales of the Kushaq itself have been below expectations. With the Kylaq set to further eat into those numbers, it will be important to create a better value proposition for the Kushaq. This will also be crucial for Skoda in achieving the targeted 1,00,000 annual sales by 2026.
So, to keep it relevant and up to date, Janeba has confirmed that a Kushaq facelift is due in 2025. “The Kushaq will get a mid-lifecycle update next year, and there will be continuous development in order to create a different value proposition.”
Plus, the carmaker is keen to differentiate both models on the ownership front. “There are a lot of things which the Kushaq has that the Kylaq does not, or has it differently. We will try to create a different value proposition with things like the warranty and cost of ownership. So, there are things we can adjust to create a differentiation,” said Janeba.
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