Similarly, Skoda’s sales in India in 2024-2025 were at 44,866 units, marginally higher from 44,522 units in 2023-2024, but down from 52,269 units in 2022-2023.
On the other hand, the Volkswagen brand posted sales of 42,230 units in 2024-25, down from 43,197 units in 2023-2024. The brand had clocked sales of 41,263 units in 2022-2023.”Renault, Skoda, and Volkswagen faced several headwinds in India despite their tenure,” JATO Dynamics India President Ravi G Bhatia told PTI.
Explaining why these brands have struggled in India, he said, ”Initially, these brands focused heavily on sedans — Vento, Rapid, and Scala — which limited their exposure to the fast-expanding SUV segment.” Simultaneously, Bhatia said, ”They were slower in refreshing product lines, with many models remaining unchanged over extended periods. Network reach has also remained narrow, particularly in Tier 2 and Tier 3 markets, restricting access to a broader audience.” Adding to the woes of these brands is ”India’s unique tax structure, where sub-4-metre vehicles benefit from significantly lower levies”.
”This has favoured Japanese and Korean OEMs known for cost-effective compact cars. European brands, by contrast, traditionally build larger models and have struggled to deliver competitive offerings within this constraint,” Bhatia noted.
Under the current policy, passenger vehicles (petrol, CNG, LPG) up to 4 metres in length and up to 1200cc engine attract GST of 28% and 1% compensation cess.
Passenger vehicles (diesel) up to 4 metres in length and up to 1500 cc engine is levied 28% GST and 3% compensation cess.
Passenger vehicles of length above 4 metre and engine capacity 1500 cc attract 28% GST and cess of 17%, while those above 1500 cc engine size attract 28% GST and cess of 17%.
On the other hand, passenger vehicles, popularly known as SUVs — above 4 metres in length, above 1,500cc engine and more than 170 mm in ground clearance — attract 28% GST with 22% compensation cess.
Bhatia noted that while domestic OEMs like Tata and Mahindra lead by Japanese Maruti Suzuki have captured market share through high localisation, frequent product launches, and early adoption of alternative fuel engines including CNG, hybrids and BEVs, the European players have lagged in electric and hybrid offerings.
However, he said, ”There are signs of course correction. Skoda, for instance, recently launched the Kylaq, a subcompact SUV tailored for India.” On the path forward for these European brands, he said it ”may lie in leveraging India for exports and R&D while focusing on under-4-metre, cost-competitive platforms”.
With such realignments, sustainable growth is possible, he added.
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