Czech car maker has become too profitable for its own good.
It seems that you can be a victim of your own success in the Volkswagen Group – reports emerging out of Germany suggest that Volkswagen is set to clamp down on subsidiary brand Skoda’s success that some feel threatens VW itself.
Staff unions are demanding that production of Skoda cars be moved from the Czech Republic to Germany to cover factories that are operating well below capacity. Volkswagen managers are said to be keen on the idea because Skoda enjoys lower build costs in its current factories because of cheaper labour. Volkswagen is also planning to charge Skoda more for the shared technology it uses in its cars, including the main platforms that underpin its vehicles, engines and electronics.
VW bosses are said to have been stung by recent reviews in the German press where Skoda models such as the Superb and new Kodiaq SUV have out-performed their respective Volkswagen stablemates, the Passat and Tiguan.
Once the object of many jokes (see below), Skoda has lit up the sales charts in the 26 years it has been owned by Volkswagen, and has become more profitable even than Audi. In fact, Skoda profits were second only to Porsche in 2016.
The fact that the Skoda brand has emerged largely unscathed out of the Dieselgate scandal while Volkswagen and Audi have suffered massive sales drops will only have contributed to the internal tension within the Group. With the Dieselgate scandal costing Volkswagen billions in damages and modifications to existing diesel engines, the company has been forced to cut workforce numbers in Germany in order to save money.
Skoda’s main staff union has said the proposals could cost up to 2,000 jobs in the Czech Republic, and the country’s prime minister has already intervened to say that he is going to do what he can to make sure that the jobs remain in the country.
Volkswagen brand CEO Herbert Diess pushed at a recent board meeting for more differentiation between VW and Skoda, which could lead to the Czech manufacturer being forced to cut models and move downmarket in terms of quality.
A spokesman for the VW Group admitted that the considerations were taking place, but declined to add any further comment: ’The future positioning of brands is being looked at, but discussions are still ongoing.’ In public, however, Diess has put a positive spin on the VW Group competition, describing it as ‘helpful’.
Our five favourite Skoda jokes of the early 1990s
How do you double the value of a Skoda?
Put a Mars Bar on the passenger seat
What is the heated rear window on a Skoda for?
To keep your hands warm while you push it.
What do you call a Skoda with a seatbelt?
What’s the difference between a Skoda and a golf ball?
A golf ball can be driven 300 yards.
A man walks into a garage. ‘Have you got a wing mirror for a Skoda?’ he asks.
Replies the mechanic: ’Seems like a fair swap.’