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Volkswagen Group-owned Skoda's Indian unit on Tuesday said it will launch a small sport utility vehicle (SUV) by the second half of 2025 as it looks to take on larger rivals Tata Motors and Hyundai in the country's fastest-growing segment.

The new SUV, slated to be Skoda's entry-level offering in India, will be aimed at cost-conscious city and small town buyers and is a part of the company's plan to reach total annual sales of 100,000 in the country by fiscal 2026.

It took Skoda two years to sell roughly 100,000 cars in India between 2022 and 2023.

Skoda did not disclose a name and price for the new model. However, the car's potential rivals - Tata Punch and Hyundai Exter - start at around 613,000 rupees (~$7,400).

Urban Indians over the last two years have upgraded from smaller cars to feature-packed SUVs, which now account for every other car sold.

Skoda is also targeting a 5% market share in India for the Volkswagen family of cars, which includes Volkswagen and luxury brands Audi and Porsche.

Volkswagen and Skoda, which form the bulk of sales for the Volkswagen Group, have a 2.2% market share in India.

The SUV would be built on the same platform that is already used for its top-selling Kushaq SUV and the larger Kodiaq. A platform is the base or underpinnings on which a car is built.

The Kushaq alone forms 53% of Skoda's sales in India, with close to 21,000 units sold so far this fiscal.