Volkswagen's Skoda to invest more than $1 billion in India

Skoda's vehicle sales in India rose 30 percent in 2017, powered by demand for Skoda Rapid cars and Kodiaq SUVs. (Photo: Reuters)

European automaker Skoda plans to produce a new mid-sized sport utility vehicle in India, it said on Monday, as part of a 1 billion euro ($1.16 billion) investment by its parent Volkswagen to revive sales in one of the world's fastest growing automobile markets.

Volkswagen also plans to expand its manufacturing unit at Aurangabad in western India and set up a new engineering center to help raise its market share to 5 per cent by 2025.

Skoda's expansion comes as its Wolfsburg, Germany-based parent embarks on a de centralisation drive aimed at handing responsibility for managing different global regions to its various brands.

Skoda's vehicle sales in India rose 30 per cent in 2017, powered by demand for Skoda Rapid cars as well as Kodiaq SUVs.

VW, however, has lagged rivals including Ford and Toyota in India despite growing sales marginally last fiscal year.

"This year's sales figures show that customers are very excited about our models. It is also true, however, that the Volkswagen group has struggled in recent years to achieve its growth targets in India," Skoda Chief Executive Bernhard Maier told reporters.