Volkswagen Prepares Kylaq-Based Compact SUV for 2026 Launch

Volkswagen India is gearing up to enter the compact SUV segment with a new model set to launch in 2026, based on the Skoda Kylaq. This new offering will feature distinct exterior design updates to align with Volkswagen’s brand identity, while mechanically, it will remain identical to the Kylaq.

VW's Compact SUV Strategy

Initially, Volkswagen India had refrained from entering the competitive sub-4-metre SUV segment, allowing Skoda’s Kylaq to take the lead. VW’s reluctance was partly due to the challenges posed by the unique tax benefits for sub-4-metre vehicles in India, which limited profitability and export potential. Additionally, the brand's experience with the Volkswagen Ameo—a compact sedan that underperformed despite significant investment—further fueled their hesitation.

However, shifting market dynamics, including a slower-than-expected transition to electric vehicles (EVs), have prompted VW to reconsider its position. The compact SUV market in India remains one of the largest and most competitive, and VW has decided to join the fray with its version of the Kylaq.

Volkswagen's 2026 Compact SUV: What to Expect

While the VW compact SUV will share its platform and mechanical components with the Skoda Kylaq, it will come with distinct design elements to differentiate it. Expect a new grille, front and rear lights, bumpers, and redesigned tailgate. The interior may also feature slight variations to further set it apart from the Kylaq.

Mechanically, the SUV will be equipped with:

1.0-litre direct-injection turbo-petrol engine producing 115hp
MacPherson strut front suspension and rear twist beam axle

This setup is expected to remain unchanged, although a potential 1.5-litre ‘GT’ version could be available for buyers seeking more performance, albeit without the tax benefits that apply to smaller engines.

Challenges Ahead

Although Volkswagen’s entry into the compact SUV segment is highly anticipated, the brand faces the challenge of competing in a crowded market. With multiple successful models already dominating the segment, VW will need to craft a product that resonates with Indian car buyers and distinguishes itself in terms of design, features, and value.

This move also reflects VW’s commitment to the internal combustion engine (ICE) market in India, recognizing that the shift to EVs will be more gradual than initially forecast. With the Kylaq-based compact SUV, VW aims to secure its place in one of the most lucrative segments in the Indian auto market.