New Delhi: Volkswagen AG’s Czech model Skoda Auto AS will cease producing its Fabia compact automobile in India as a result of the corporate was incurring a loss on promoting the mannequin, in line with two individuals aware of the event.

Skoda, will, nonetheless, hold promoting the mannequin until the top of the 12 months or till current shares are exhausted.

“The corporate continues to be discovering it tough to interrupt even on the automobile,” mentioned a Skoda seller, requesting anonymity.

Successive worth cuts through the years to spice up demand have seen this automobile shedding virtually 40% of its preliminary price ticket since its launch in 2008, squeezing margins. The Fabia’s comparatively low stage of localization of components has made it very costly to provide and the issue was compounded additional by the depreciation of the Indian forex.

Skoda mentioned it would pause the manufacturing of Fabia and deal with strengthening the corporate’s presence within the sedan phase.

“Skoda is within the means of strengthening its mannequin vary and as part of this course of, Skoda is considering a pause in manufacturing of the Fabia in India,” the corporate mentioned in an emailed reply. “Skoda’s quick focus is to strengthen its presence within the sedan phase with the upcoming launches in 2013/14. The Fast in India was the primary mannequin launched as part of our world 2018 progress technique and we’re pleased with its efficiency, we anticipate future launches to additional complement our market share.”

In April, Skoda bought a paltry 115 models of Fabia. Earlier this 12 months, Honda Motor Co. Ltd withdrew its premium Jazz hatchback for related causes—the automobile was simply too costly to provide.

Skoda was shedding as a lot as 1.5 lakh per automobile and the corporate was intentionally refraining from aggressively advertising and marketing it. Skoda bought 3,343 models of the mannequin within the 12 months ended 31 March, in line with automotive trade executives, who declined to be named.

Based on one other individual aware of the event, the transfer is meant to make room for Volkswagen’ Polo.

“Whereas globally VW as a model is taken into account to be stronger than Skoda, in India it’s vice-versa and that has impacted the gross sales of Volkswagen automobiles,” mentioned this individual requesting anonymity. “The VW Group is seeking to change this technique.”

Skoda is unlikely to re-launch the Fabia earlier than 2015 and it’s not clear if the successor can be a modified model of the prevailing automobile (SK 250) or the all-new Fabia (SK 260) that’s due for a world launch subsequent 12 months. Given the low demand for the Fabia, the choice to convey it again to India has been placed on maintain.

This resolution to discontinue the money-losing Fabia can also be supposed to assist Skoda Auto India focus its sources on new product launches and buyer satisfaction, which has been the Achilles’ heel of the corporate. The corporate is betting on the brand new Octavia, which it hopes will change into a phase chief after its proposed launch in August.

“We are able to redeploy our sources from the unprofitable Fabia in the direction of brand-building for our different merchandise and seller community enlargement,” mentioned an organization official.

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