Skoda’s rapid ascension: both a blessing and a curse for parent VW AG image

Volkswagen Group’s Czech wholly owned subsidiary, Skoda, has seen booming business in recent years – but success can also bring new enemies, foreign and within.

That’s because Skoda’s much more esteemed mass-market sibling, VW’s namesake brand, has been struggling with slowing sales, lagging profits and massive investments in technologies. The latter are taken for granted by Skoda, and has helped the Bohemian carmaker to post a record sales figure last year, jumping 13 percent for the first time ever topping one million vehicles delivered around the world. The affordable brand also saw its operating profit jumping by more than 50 percent, with the margin also gaining almost 2 percent for a total of seven. Skoda has planned to introduce a new or updated model every half year under the parent company’s new ultra-flexible MQB platform and such a massive product offensive is showing its large rate of success. They have the Superb flagship that has the same interior space as a BMW 5 Series but costs less than a VW Passat.

And next year they plan to roll out a new seven-seat crossover so far dubbed internally the “A-Plus SUV,” to take advantage of the rising sales in the segment. Meanwhile, the VW core brand has seen its already feeble profit down a nudge as revenue stagnates, sales are slightly going down and the cost cuts are unable to recoup the difference. That’s even as the VW brand is traditionally priced at a premium over mass-market rivals in Europe. “The people at Skoda think quicker and better than many of the people in Wolfsburg, who are too slow and traditional,” comments an industry consultant.

Via Automotive News Europe