Skoda CEO Tells Employees Not To Worry About Potential Move Downmarket

Last month, reports from Germany suggested that the Volkswagen Group plans to reduce overlap between brands, particularly between VW, Seat and Skoda.

More specifically, VW Group CEO Herbert Diess aims to boost the VW core brand by reducing internal competition with Seat and Skoda. A way to accomplish that would be to push the Spanish marque upmarket, strengthen the VW brand, and have the Czech brand focus on entry-level cars priced between €10,000 and €20,000 ($11,180 – $22,360).

The reports were not received well in the Czech Republic and adverse reactions from within the company forced Skoda CEO Bernhard Maier to send an internal letter to employees. In the document seen by Autonews Europe, Maier wrote that Skoda’s brand values of space, functionality, value for money and forward-looking design “will not change in the future.”

Also read: Do Not Move Skoda Superb Production To Germany, Unions Warn VW

The Skoda Felicia was the first product developed under VW Group ownership, but the Czech company doesn’t want to return to those humble beginnings

In an attempt to play down worries about a big change at the brand, the Skoda CEO said that reviewing brand positioning “is one of the core tasks for the strategy department of a multi-brand corporation” and a “normal process.” He added that the VW Group’s decision to build a new plant for the next-generation Skoda Superb and VW Passat midsize cars shows that the German company has confidence in the Czech brand.

Skoda has had tremendous success in recent years, achieving consistently higher profit margins than the VW brand. That’s mostly due to the fact that Skoda’s labor costs are much lower as most of the production is concentrated in the Czech Republic. Furthermore, Skoda uses VW technology and does not need to invest in innovation.

The 2020 Skoda Superb iV plug-in hybrid is the Czech company’s most sophisticated product to date

This has brought Skoda powerful enemies in the VW Group, including the carmaker’s labor leader and supervisory board member, Bernd Osterloh. He demanded in the past that VW denies Skoda access to its latest technology and opposed the VW Group’s initial decision to give the Czech brand the operational lead on the proposed new plant in eastern Europe or Turkey.

In the end, the German carmaker changed its mind and the facility will now be a VW factory, building VW, Skoda and possibly Seat models. Regardless of VW’s plans for its Czech division, Skoda continues to fire on all cylinders. Fueled by strong demand for its three SUVs (Kodiaq, Karoq, and Kamiq), the brand sold 559,900 vehicles worldwide in the first half of 2019, up 9.6 percent year-over-year.

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  • designer_dick

    Imagine being a board member of a successful multinational automotive manufacturing group and being angry that one of your subsidiary brands is doing extremely well.

    Talk about small minded. Skoda’s success doesn’t detract from the Volkswagen brand, and adds considerably to the Volkswagen Group as a whole.

  • charlie bear

    This is just dumb from VW part, They should keep the current Skoda lineup and let Skoda make more affordable cars for the emerging markets. This brand is so successful and they should push it forward. Just look of what Renault is doing with Dacia morons!!

    • Loquacious Borborygmus

      Dacia morons
      Hey! I haven’t seen that model.
      What market is it sold in? 😉

  • It’s really hard to understand what are they doing here. They are a part of the same group, all the money is going in the same bucket. They are shooting themselves in the foot just to prove a point or what? They should let Skoda do its thing and go upmarket (what they plan to do with Seat), keep Seat in the cheap market where it is now, and done. They are making a stupid amount of money with Skoda and instead of fixing Volkswagen they are destroying their moneymaker. What the actual f….

    • Giannis Antypas

      Yes Skoda makes money but it is not THE moneymaker for VW.

      Don’t mess profit margins with actual profits.

    • designer_dick

      It’s borderline stupidity. They really seem to believe that hobbling Skoda’s competitive edge will help the VW brand perform better, and be a net benefit to the Volkswagen Group.

  • Giannis Antypas

    SEAT has been there where Skoda is now,
    when in the early 2000s SEAT had a fully competent range, and rapidly increasing sales numbers largely exceeding those of Skoda.

    That was the time when the VW shareholders had been frustrated by SEAT’s success at the time
    and demanded a shake up of the group’s brand postioning.

    and all of a sudden, SEATs had been deprived of top specced trims and high end technologies.

    • Hoe

      Very wel said, 100% true

  • Six_Tymes

    I wish I could buy a decent new car for that price in the states.

  • designer_dick

    They’ll discard the smaller, less profitable and less well-regarded SEAT long before they get rid of Skoda.

  • Matteo Tommasi

    SEAT right now is a failure, and Cupra rebranding won’t help.

  • Nowan

    This is where VW is different from GM. Where the VW board frustrated because their brands are fighting each other to gain the top spot, and the GM… you know the rest 🙂

  • Sébastien

    No better way to kill a brand image… And turn away current customers/owners. Well done VW

  • salamOOn

    Vw is shooting own leg with this approach.

  • Marc

    I think people are getting the wrong idea here. Skoda will still produce the same cars they do today, great cars. But what will happen is they will get less tech i.e. Self driving, OTA updates. This is a great idea. I have always been a fan of the Golf but, the new golf has way to much tech, and a lot of people simply don’t want all this stuff, they just want a good car, a more simple car. This, I believe, will be Skoda and for less money. What’s not to like?

  • Marc

    I think you need to research ‘German management’ it’s modern and world class. 50% of the board is made up of workers from the factory floor.

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