VW subsidiary: Skoda on the way to the millionaires’ club

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Skoda on the way to the millionaires‘ club

VW subsidiary: Skoda on the way to the millionaires' club-millionaires

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Source: Skoda / © Michel de Vries 2006

A million. This figure was expressed by the former Skoda CEO Detlef Wittig. He was in office until September 30th. Now his successor Reinhard Jung has to see how Skoda will manage to sell a million cars a year by 2015.

E.a million cars? From Skoda from Mlada Boleslav near Prague? This is roughly the number of vehicles that Audi sells today with various different series and variants such as station wagons, sedans, convertibles, sports coupes and an extremely opulent off-road vehicle. Audi is an advertising partner of FC Bayern Munich, and Skoda supported American football teams up until 2006, which play in front of 10,000 spectators.

Today, Skoda has a rather poor model range to oppose the wide range of its sister company Audi, poor in terms of the variety of the four series, but a very successful one nonetheless. It is to be expanded and, for example, the small yeti 2009 off-road vehicle will be added. Other models are to follow, such as an offshoot of the Up concept study that VW showed at the IAA in Frankfurt. CEO Martin Winterkorn has already announced that. The next big appearance, however, will be the Superb limousine, which will be presented at the Geneva exhibition in March.

The year 1996 ushered in the big turnaround. At that time, Skoda had a market share of 0.62 percent in Germany and sold 21,611 vehicles. So Skoda was almost invisible on German roads, the vehicles were niche models. In the following year, however, there were already a good 30,000 vehicles sold, and a year later sales rose to just under 58,000 cars.

The Octavia triggered the boom

The reason for the boom, which continues unabated to this day? The Czech manufacturer launched the Skoda Octavia eleven years ago under the direction of its new owner Volkswagen. A car that the competitors had little to match in terms of price and performance. What is the secret of success? "We deliver excellent quality combined with an excellent price-value ratio", says Wittig.

Last year, the Czechs sold around 550,000 vehicles worldwide for the first time. A look at the figures shows the enormous development of Skoda, which is also associated with a serious change in image.

While the vehicles used to be staid and technically obsolete, today they are considered solid and contemporary. At Skoda, VW technology is available at reduced prices, which was enough to win over buyers.

Anyone who turns up their nose at the brand name Skoda has overslept a trend. Because today Skoda knows how to offer cars, the luxury of which lies behind an inconspicuous facade. That’s how it used to be at Saab. Customers did not want to communicate the value of their vehicle to the outside world in their cars. Today the Skoda Superb offers that. "We wanted to make an offer to the newcomers within the brand and at the same time move into the upper middle class segment", says the former boss Wittig.

The Superb also comes as a station wagon

It is certain that the Superb will also be offered as a station wagon in the next generation. It could offer an alternative for customers of the Mercedes C and E class, but also for BMW and Audi. The internal competition with the group brands Audi and VW has so far been an obstacle to the station wagon variant.

Wittig likes to cite the tradition of the 100-year-old brand as the reason for the continued success. But that is more likely to be an answer that people in the Czech Republic like to hear. Because Wittig also says that the customers "more and more on reliability", of vehicles would set. It is crucial for the parent company Volkswagen that Skoda achieves high yields. With a turnover of 1.6 billion euros, Skoda earned 172 million euros last year. One of the foundations for this is that Skoda can help itself from the shelves of VW and Audi.

The chassis of the new Octavia with the high-quality four-link rear axle comes from the Golf V, the engines come from Audi and VW. In addition, the hourly wages in the three plants in the Czech Republic and another plant in Bosnia-Herzegovina are lower than those in Wolfsburg or Ingolstadt.

How well the concept works for Skoda is shown by the fact that the so-called cannibalization effect on Volkswagen is not very large. What this means is that customers prefer to buy an Octavia instead of a Golf or a Skoda Fabia instead of a Polo, i.e. from Skoda at the expense of another group brand. Skoda is more likely to win customers from Peugeot or Opel. And: "We catch buyers for whom the budget for an Audi A4 or Golf is not enough", says Christoph Ludewig, spokesman for Skoda.

Skoda’s success story will continue. It is also clear where the manufacturer wants to increase: in Eastern Europe and Asia. Wittig calls them that "Future markets “Skodas.

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