Volkswagen Seeks To Minimise Skoda Threat — Report

by under News on 06 Oct 2017 12:52:20 PM06 Oct 2017

German tutelage has resulted in an internal rivalry, it seems.

Volkswagen Seeks To Minimise Skoda Threat — Report

It appears that not all is well in Volkswagen’s offices in Wolfsburg, Germany. As the company moves to put the far-reaching Dieselgate scandal behind it (by launching itself into a 20-billion Euro electric offensive that will see 50 electrified cars introduced by 2025), it appears that its biggest concerns are from threats within its ranks. Rather than being concerned about the EV onslaught being brought forward by Tesla, a report has suggested that they’re more worried about a surge from Skoda.

Skoda, to some board members within the Volkswagen Group, enjoys an unfair advantage in that it has access to the very latest German technology and manufacturing them in the Czech Republic, where labour is cheaper. That combination means that of late, the popularity and acclaim of Skoda cars has posed a serious threat to the Volkswagen brand, with the Czech carmaker able to poach customers that were traditionally thought to prefer the sedate, mature, dependable nature of the German marque.

Volkswagen Seeks To Minimise Skoda Threat — Report
“Instead of devoting our efforts to beating Tesla, we may just be setting up a futile internal conflict.” — Manager, Volkswagen Group, speaking to Reuters

The issue stems from a debate between profits and jobs, as well as control from central management and autonomy that Volkswagen Group’s 12-marques enjoy. While Skoda has flourished under the near 3-decades it’s spent under the VW Group, Volkswagen itself is struggling, feeling the weight of excess capacity and under-utilised assets. Thousands of job cuts are being considered by the once-infallible German carmaker, and the workers’ unions that command clout within the company see Skoda as the potential saviour, as well as a threat.

Volkswagen Seeks To Minimise Skoda Threat — Report

The workers unions reckon that to save jobs in Germany, Skoda ought to move some of its production out of the Czech republic and make better use of Volkswagen’s under-utilised production facilities. Further, it’s suggested that Skoda ought to pay far heftier royalties to Volkswagen for their use of shared technology, like the Group’s next-generation ‘MQB’ and ‘MEB’ vehicle architecture. While this would undoubtedly keep VW bobbing along through stormy waters, it would then only really shift the issue to the Czech Republic, where Skoda’s workers union says such a move would put some 2,000 jobs at risk. When contacted by Reuters, VW’s works council declined to comment.

VW-brand supremo Dr. Herbert Diess recently spoke at a committee meeting, and signalled his wish to have further distance placed between Volkswagen and Skoda products, particularly as the wider Group makes its move towards an electrified future. These comments were forwarded to Reuters by no less than three managers, which resulted in the following statement being released by the VW Group:

Volkswagen Seeks To Minimise Skoda Threat — Report
“The future positioning of brands is being looked at, but discussions are still ongoing.” — Spokesman, Volkswagen Group AG

Preservation of German jobs are a definite priority for most of the VW Group board, with German unions holding as much as half of the company’s board positions. Issues have been brewing since opinion has shifted in favour of Skoda’s cars, which have regularly received greater praise than their Volkswagen-branded cousins, thanks to the formers’ great emphasis on value. And while it would be logical to assume that there is some cross-shopping between the marques, Skoda CEO Berhand Maier says that most of the company’s customers come from outside the Volkswagen Group.

Volkswagen Seeks To Minimise Skoda Threat — Report

Contrastingly, Volkswagen boss Dr. Diess reckons that “some internal competition is helpful,” downplaying concerns by noting that VW AG has nearly 100 vehicles on offer, hence it’s nigh-on impossible not to step on some toes along the way. While that may have been fine for a while, with an electrified future on the horizon, tensions can only continue to rise, likely hitting a crescendo on November 17th when the VW Group supervisory board meet to approve annual investment budgets for the conglomerate.

Stay tuned to CarShowroom as we bring you more updates as they come.

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