Skoda goes in for boutique shops

BMW was the first to do it with BMW Studio. Premium carmaker SkodaAuto India, a unit of the Volkswagen Group, has been quick to follow suit by launching its limited series of boutique showrooms in India.

What is unique is that the showrooms (Skoda launched the second one in Mumbai last week), are not about selling cars, but to promote the brand. The boutique shops will have one car displayed inside, while the rest of the space will showcase a wide range of lifestyle products such as Skoda T-shirts, kit-cars, fashion and car accessories. Skoda will shortly introduce virtual product tours and express test drives as well. The company is planning to launch 15 such showrooms in nine cities by the end of this year. These will be different from the usual dealer shops which will have all the car models.

Skoda doesn’t have such showrooms anywhere else in the world, but plans to replicate it in other countries, depending on the experience here. The success of these boutique showrooms will be evaluated on the number of footfalls it can generate rather than sales of cars. However, from the commercial viewpoint, the dealers operating these showrooms will also have higher targets to meet than other dealers as the consumer exposure is also much higher.

So what is the idea behind a showroom without cars?

Thomas Kuehl, board member, sales and marketing, SkodaAuto India says it’s the Skoda experience that counts. The company is also in talks with a few fashion designers who would display and retail their creations at these showrooms.

“The boutique showroom stands out from the others in terms of its contemporary design concept. They are created keeping in mind the lifestyle of our customer. Opening such a showroom in a prime commercial area allows us to market the brand easier and quicker”, says Kuehl.

Existing dealers of the company will be making the required investment in setting up these showrooms and will be responsible for managing them as well. They will be run under a separate team and management appointed by SkodaAuto specialising in a different kind of consumer approach than what is otherwise experienced in a normal auto sales outlet. Although SkodaAuto has been in India for the past eight years, it has so far sold just 80,000 units of four models. This is largely due to its absence in the volume-generating compact car category in the affordable segment of Rs 3-4 lakh. The company intends to launch the Yeti, a sports utility vehicle (SUV), in the second half of this year. Although the company has not provided details on the pricing, the SUV will compete for space against Toyota Fortuner, Chevrolet Captiva, Honda CR-V and Ford Endeavour which are sold in the price band of Rs 16-20 lakh.

In addition SkodaAuto will also launch a refurbished Fabia, its hatchback with new engine options and a refreshed interior. These new launches along with other activities including a new compact car below the Fabia, is expected to shore up the company’s market share in the domestic market. For the period ended December 31, SkodaAuto saw sales of 11,992 units, a growth of just 6 per cent, compared to the industry growth of 24 per cent.

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Business Standard – 1/2/2010

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