The group aims to meet evolving fuel efficiency standards.The Skoda-led Volkswagen Group in India is actively evaluating the introduction of CNG and flex-fuel vehicles, as advanced fuel emission regulations push automakers towards broadening their powertrain mix. Assessments are running alongside plans to introduce an electric vehicle, Skoda Auto Volkswagen India managing director Piyush Arora told ET.
The group is considering new powertrains even as it is planning close to 19-20 product interventions, including upgrades, in its India portfolio this year. Roughly half of these will come from Skoda, with the refreshed Kushaq, the Kodiaq RS, and the Octavia RS among the confirmed additions. Arora did not provide any timelines for bringing in new powertrains, saying: “At the project phase, it would be premature for me to share any timeline.”
The Corporate Average Fuel Efficiency (CAFE-3) rules, set to take effect in April 2027, require automakers to reduce the average fuel consumption of all their models to 3.01 litres per 100 km by 203U2 from 3.73 litres in the first year. This needs a nearly 20 per cent reduction in fleet-average carbon-dioxide emissions over five years. The rules offer meaningful incentives for strong hybrids, flex-fuel vehicles and EVs.
Skoda Auto Volkswagen India, which sells cars under Skoda, Volkswagen, Audi, Bentley and Porsche, currently has no CNG, flex-fuel, hybrid electric vehicles in its portfolio, making the group one of the more exposed to regulatory risks among mainstream automakers as the deadline approaches.
Arora said the company is deliberately pursuing a multi-technology path rather than committing early to a single powertrain direction. He cited the slower-than-expected build-out of charging infrastructure and EV penetration, under 4 per cent of auto sales in India, as factors that have shaped the group’s pace on electrification.
Bilateral trade agreements now under discussion could open up additional technology options and influence the group’s final powertrain priorities for India, he said.
The regulatory challenge comes even as the group posted its strongest-ever sales performance in India. Driven by the Skoda Kylaq compact SUV, the group’s India subsidiary, Skoda Auto Volkswagen India, sold about 117,000 vehicles in the local market in calendar year 2025, up around 36 per cent from the year before. Including exports, sales totalled 159,500 units.
On the product front, the refreshed Kushaq leads 2026 calendar. It crossed 100,000 cumulative sales last year and now holds a 2.5-3.0 per cent segment share, Arora said. He expressed confidence in double-digit volume growth for the group over at least the next six months. Broader strategic planning remains partially contingent on bilateral trade agreement outcomes. Arora said official details on quota systems, duty structures, and country-of-origin rules are still awaited.
