Volkswagen Group will not make Skoda a budget brandOctober 19, 2019
Skoda’s CEO is keen to calm concerns about a potential brand push to the bottom of the market.
Skoda executives tried to reassure their employees after reports came out that its owner, the Volkswagen Group, was considering changing the brand by dropping it to the bottom of the market to compete with low-cost brands such as Dacia Renault. Skoda CEO Bernhard Meyer noted that brand value, spaciousness, functionality, forward-looking design, value for money “will not change in the future.”
However, according to experts, Skoda may be the biggest “loser” in positioning the Volkswagen Group brands in the market compared to Porsche, Audi, Bentley and Lamborghini.
Herbert Diss, CEO of VW Group, seeks to reduce duplication between brands, seeking to increase the profitability of the automaker. In particular, he wants to strengthen the VW brand by reducing competition with its sister brands Skoda and Seat.
“If three or four brands with the same products compete for the same target group, then all brands suffer. That’s why we need to expand our positioning, adjust our positioning, if necessary, and continue to strengthen interaction, ” – said Diss.
Skoda will focus on selling cars for between 10,000 and 20,000 euros, although the brand will retain its flagship Superb car for at least one more generation. Meyer announced the decision of the VW Group to build a new factory for the next mid-size Skoda Superb and VW Passat cars as evidence of leadership confidence in the Skoda brand.
In recent years, Skoda has been a source of profit for VW with margins constantly exceeding VW margins. Skoda’s costs are relatively low because it uses VW technology and its production is concentrated in the Czech Republic, where costs are lower than in Germany.
Recently, the Skoda range has expanded and now includes three SUVs, which helped to increase car sales in the world market by 9.6% to 559,900 in the first half. Skoda is ready to launch its first all-electric car next year, a production version of the Vision iV concept presented at the Geneva Motor Show in March. It will be based on the VW Group modular EV platform. In addition, Skoda plans to release two more electric vehicles with a battery, but they have not yet received OTTS.
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