Skoda Auto is preparing its next phase of investment in India as it plans to expand its product and powertrain portfolio beyond the petrol-only range currently manufactured in the country.

Internally referred to as India 3.0, the programme is expected to support the introduction of CNG-powered models, including the Kylaq, as well as locally manufactured battery electric vehicles (BEVs).

The proposed investment could be around EUR 1 billion (US$ 1.16 billion) and is expected to fund the design, development and engineering of new products. The programme is likely to result in five-seat and seven-seat BEVs, with the first locally manufactured electric model expected to arrive in 2028.

Skoda Auto Volkswagen India is evaluating different ways to fund and execute the programme, including the possibility of bringing in a strategic partner. Martin Jahn, Skoda Auto Board Member for Sales and Marketing, said the company is assessing options for developing an electric vehicle for India, although he did not disclose the size or structure of the proposed investment.

"We know we have to do electric, so we are now thinking about what would be the best option for an electric car in India," Jahn said on the sidelines of the updated Slavia's launch.

CNG strategy to begin with Kylaq

In the near term, Skoda is evaluating a CNG powertrain for the Kylaq and is also considering CNG versions of the Slavia and Kushaq, as all three models use the 1.0-litre turbo-petrol engine and MQB-A0-IN platform.

Skoda India Brand Director Ashish Gupta said the common engine and platform architecture means all three models could technically receive CNG, although the Kylaq segment has been identified as the immediate priority.

"The 1.0-litre engine and the MQB A0-IN platform are common across the Kylaq, Kushaq and Slavia. So, all three products are open. We are working on our CNG strategy. With the recent shift towards alternate fuels, and especially CNG, in many parts of the country, I think our CNG plans will get accelerated," Gupta said.

He said changing consumer sentiment towards petrol, influenced by the Middle East crisis and policy discussions surrounding ethanol blending, has affected petrol's market share and increased the need for Skoda to diversify its powertrain portfolio.

"The Middle East crisis and policy noise on ethanol blending have affected consumer sentiment on petrol, resulting in a drop in market share. To stay relevant, we have to diversify," Gupta said, adding that the Kylaq segment remains the company's priority for CNG.

Performance and positioning of CNG models

For a potential CNG version, Skoda is assessing how to balance fuel efficiency with vehicle performance. Gupta said CNG is expected to result in a 10-15 per cent reduction in performance compared with petrol, which could be acceptable to customers because of the fuel's economic benefits.

"This is something which we have given as a north star to our development team. Compared to petrol, a 10-15% drop in performance is expected from CNG, something which is acceptable to customers because they understand that CNG does not give you the same kind of output as petrol. So I have to make sure that I get the right product, the right solution - at the right value proposition, at the right time," he said.

Gupta also said CNG could appeal to customers in higher-priced vehicle segments rather than remaining limited to traditionally budget-oriented buyers, as some premium customers are considering CNG vehicles because of their potential economic benefits.

"There is a potential for the right car at the right price point. And even in CNG, it has moved from the utilitarian kind of customer who wanted to buy a CNG. Today, even premium customers are okay with buying a CNG car purely from the economic benefits they derive," Gupta said.

The Kylaq's compact SUV segment already includes CNG offerings from the Maruti Suzuki Brezza, Tata Nexon, Hyundai Venue, Renault Kiger and Nissan Magnite. The Tata Nexon is currently the only compact SUV in this group to combine CNG with a turbo-petrol engine.

In the midsize SUV segment occupied by the Kushaq, the Maruti Suzuki Victoris, Grand Vitara and Toyota Hyryder are available with CNG. The Slavia competes in the midsize sedan segment, where there are currently no CNG-equipped models.

Electric vehicle programme

The larger India 3.0 programme is expected to bring Skoda and Volkswagen's first mainstream locally manufactured BEVs to India. The first of two locally manufactured BEVs is expected in 2028, while the programme is expected to eventually include five-seat and seven-seat electric models.

The electric vehicle programme is likely to use an adaptation of Volkswagen Group's China Main Platform (CMP). The India-specific version is referred to as the India Main Platform (IMP) and will be adapted to meet local cost requirements and market conditions.

The group intends to retain the underlying electric architecture while localising the platform, battery system and other key components. A high level of localisation will be required for Skoda and Volkswagen to price their electric models competitively in India's mainstream EV market.

Potential JSW alliance and investment

Skoda Auto Volkswagen India is also in the final stages of discussions for a potential alliance with the JSW Group. The proposed arrangement is expected to give the Indian conglomerate a majority stake and provide capital to support the Volkswagen Group's expansion in India.

However, the discussions have not yet reached a formal conclusion, and the final structure and scope of any alliance have yet to be announced. Skoda Auto Volkswagen India is also considering alternative funding routes if the partnership does not materialise.

India 3.0 will follow the Volkswagen Group's India 2.0 programme, which resulted in the development of the heavily localised MQB-A0-IN architecture. The platform underpins the Skoda Kushaq and Slavia and Volkswagen Taigun and Virtus, and was subsequently adapted for the sub-four-metre Skoda Kylaq.

The potential CNG Kylaq would expand Skoda's powertrain range, while the India 3.0 programme is intended to add locally developed and manufactured electric vehicles to the company's product portfolio. The CNG strategy and BEV programme would diversify the company's powertrain options beyond petrol in response to demand for alternative powertrains in India.