Volkswagen thinks Skoda isn’t paying enough for its success as the German brand wonders how it can differentiate its offerings.
As reported by Reuters, sources have said Volkswagen is raising concerns over the success of its more affordable Skoda brand. The Czech brand, which VW acquired 26 years ago, has flourished since building its cars on VW platforms but operates at a labour rate of about a third the cost in Germany.
Specifically, Volkswagen Group managers and unions are seeking to move some of Skoda’s production to Germany and charge the brand more to access its shared platform architecture which underpins most of Skoda’s recent success.
Skoda CEO Bernhard Maier told a press conference that jobs would not be at risk but also that production had reached capacity and future jobs would not be on home soil.
“Skoda is running at the edge of its capacity, which is evidence that our strategy is working. At the moment, concerning global demand, we are not able to cover it from the Czech Republic, [and] for this reason we are looking around at other production capacities,” Reuters reported him as saying.
In response, Skoda’s workers’ union claimed that up to 2000 jobs could be lost if production were to move, prompting Czech Prime Minister Bohuslav Sobotka to seek clarification from senior Skoda managers. Sobotka later reported in a press conference that he had been assured jobs would not be threatened.
Moving on from suggestions VW might sabotage itself, Reuters has since reported that Volkswagen CEO Matthias Mueller recently told an executive board in Wolfsburg that the focus is to differentiate its mainstream brands. Some of those brands also include Seat in Europe.
“The key challenge is (to achieve) a perfect market coverage with clear territories for the brands,” Matthias told the strategy meeting of about 400 managers.
“We must now be able to better use the synergies that our unique alliance of brands offer than we have done to date,” he said. “Of course, it is an extreme challenge sometimes to steer this tanker and to balance the (different) interests,” he added.
It is expected that future differentiation will begin with the introduction of electric vehicles
as the brand recuperates from its diesel emissions scandal. It is in VW’s interest to be seen as the leading brand once its new EVs come to market although it could also cause internal conflict.
“Instead of devoting our efforts to beating Tesla we may just be setting up a futile internal conflict,” Reuters reports a source as saying.
The shift to large scale electric vehicle production won’t come cheap but the company will make large savings by sharing its new PPE platform across premium brands Audi and Porsche.
“On balance, we expect 30 percent less workload (compared to current platforms),” said Mueller.
Skoda sold a record making 1.13 million vehicles last year and has recently taken on 3000 workers to join its staff of 28,000 employees.
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