Prague Post reported that Volkswagen AG and its Czech subsidiary Skoda Auto seem to have come to an agreement on a merchandising flap that saw sales of some cheaper, high quality Skoda models encroaching on VW's upper market territory.
According to officials at both VW and Skoda Auto, the plan is for VW to take the lead on producing top tier cars for middle to upper class buyers, while Skoda will target the more budget conscious consumers, thus covering both sectors of the market without treading on each other's toes. And with projections showing a growth rate more than double the 41% estimated for VW between now and 2018, Skoda will be the driving force behind the group's growth.
Mr Rudolf Dreithaler spokesman for Skoda said that "There is a big request for affordable cars, and we're going to take care of it. We definitely will sell over 800,000 cars in 2011, and we expect to experience double digit growth."
Tension arose between the two automakers when sales of Skoda's Superb overtook VW's Passat in 2008, making the two brands competitors. Since the Superb was similar in looks and design, but cost 2,500 euros less, including built in amentities that were considered extras in the Passat, it ended up outselling the German vehicle. Since then, the relationship between the two companies is on smoother ground, and both are happy that the new marketing calls for a clear division between brands.
Within the past year, Skoda has undergone a transformation as a massive effort to become the next people's car, a position formerly held by VW. They've re branded their logo by removing the black band around the winged arrow and started a model offensive, aiming to roll out two new affordable models per year. So far, the company has launched the new Citigo on the Czech market, Skoda's smallest and cheapest model starting at CZK 179,900 and the Skoda Rapid in India.
Mr Jirí Šimara, an automotive analyst at Cyrrus, said that "If Volkswagen wants to become the largest automobile maker in the world, the internal disputes have to be put aside and all the energy concentrated on the fight with the major competitors like Toyota and GM. This said I don't expect any more disputes over internal competition. VW is giving Skoda the focus of the production of the cheaper models, and they will focus on the cars for more demanding customers."
Both Skoda and VW are hinging their strategy on demand from first time buyers in India, China and Russia. According to Mr Simara, VW originally partnered with Suzuki to gain access into the Asian market, but that relationship stalled. He said that "Due to this debacle with Suzuki, I expect VW will be relying now on Skoda because of its already good position in Eastern Europe, Russia, China and India. These markets offer potential of the highest growth, especially India."
Mr Dreithaler said that Skoda Auto has already seen some of the benefits of the new strategy, with several hundred new jobs created in the Czech Republic, strengthened production capacities both at home and abroad, and key new investments landed. He added that "We have to remain cautious, but we will increase our sales 84%. One and a half million cars by 2018 remains our target."
Sourced from praguepost.com
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