Volkswagen is gearing up to launch the Taigun compact SUV in the country and I feel, the company could learn a lot from how the Kushaq has been priced.
With the arrival of the Skoda Kushaq – the stage is set for a huge showdown in the compact SUV space. With huge volumes at play, the segment is very critical for many automakers. The Skoda Kushaq has its task cut out for it since it needs to fend off not only the bestselling Kia Seltos and Hyundai Creta, but also its own cousin – the upcoming Volkswagen Taigun. Even though the VW model is not yet released to market, enough is already known about it. The Taigun and Kushaq share a lot, including the VW Group’s MQB A0 IN platform, the TSI engine family and the various gearboxes they are getting. But the cars look nothing like one another – inside and out. The Kushaq has also shown the Group’s intent through its robust build, and long feature list – something the Koreans excelled at until now. So whether it is ventilated seats, touchscreen infotainment, or wireless charging – the Kushaq has it all and then some. And it does well on being loaded on the safety front. So what does this indicate about the VW Taigun then? Well, for starters we can expect a lot of that equipment to show up on the car. But the million dollar question now is – will it priced at par with, higher than or lower than the Kushaq?
Zac Hollis, Brand Director, Skoda Auto India told me, “You’ve got to be competitive in the marketplace, and yet make sure you have a business case. We are competitive in the marketplace – I am confident of that. The job now is to get people driving the car.” This was said in answer to my query on how much pressure there must have been on getting the pricing right. So what does this indicate about the VW Taigun then? Well, for starters we can expect a lot of that above-mentioned equipment to show up on the car. So will it be priced at par then? Well, the learning for VW has seen the company finally think differently in India. We have seen years of preconceived notions and “other market” rules drop by the wayside, as VW has finally begun to appreciate India’s complex market structure – and indeed highly demanding and shrewd buyer. So we could get aggressive prices on the Taigun compact SUV. Let me explain why that makes sense.
Look at what happened with the VW T-Roc and Skoda Karoq launched last year. The T-Roc was pretty packed with features – with everything from cylinder deactivation to lane-keep assist, and a large panoramic sunroof. The Karoq on the other hand is a touch bigger and was even more loaded. The result was completely different positioning on the two cars. The T-Roc was seen as a foot in the door to the VW SUV world – and was priced at ₹ 19.99 lakh ex-showroom (that’s now crept up to ₹ 21.35 lakh), while the Karoq drove in at a ₹ 5 lakh premium. In the usual global positioning norms had been followed, the VW brand product would not have undercut the Skoda – especially given that it was only just the one well-specced variant being offered. Why this was significant was because that unlike the Kodiaq/Tiguan in the past, these were very like products. The first Kodiaq we got was a swish, high-end, long wheelbase offering, while the Tiguan was initially short wheelbase only, and offered way less equipment and trim. So there you could argue the comparison wasn’t even and so the price positioning difference didn’t matter. With the Taigun I expect that to change some more.
So yes, it does make sense for VW to go after the ₹ 8.90-16.40 lakh price band, and not more than a lakh higher as seen with the Kushaq. That will also give both models room to play in their own space, and yet allow them to go after the Hyundai Creta or Kia Seltos – without cannibalising each other as much. So does that mean VW should launch a “cheapened” version of the car we saw last year at the expo? Nope – not at all, but yes the trim consideration across variants should firmly keep pricing in clear view. Given that the platform and the 1.0 TSI engine have been productionised in India, the local content is very high – allowing room for this kind of aggressive pricing. And that is also why (like Skoda) I do not expect VW to offer too many variants with the imported 1.5 TSI engine (or its optional DSG gearbox). The latter will be the drivers’ car in the pack, and yet the 1.0 will have enough takers – even simply just for the badge.
The challenges for both VW Group companies will remain. Chief amongst them will be taking on the pan India presence and huge leadership of the Korean brands. But also key will be how they manage to overcome the no-diesel nature of their offering. And the fact that while a 1.0 TSI engine is actually plenty for a car this size, customer perception will need huge work to compete with larger displacement turbo and naturally aspirated rivals. I expect the Taigun to break the suspense in its production avatar in early August – and by the end of that month hopefully we would have a sense of Volkswagen India’s pricing strategy too. But I would be very surprised if it were anything to off from what I am sticking my neck out for here.