((Late Re-post)) Interesting/awkward news at VW, RE: Skoda. 

"Svend" (svend) 10/06/2017 at 21:56 • Filed to: None

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I’ll just copy and paste it from Autoblog.

!!! UNKNOWN CONTENT TYPE !!!

BERLIN, Oct 4 (Reuters) - !!!error: Indecipherable SUB-paragraph formatting!!! managers and unions are seeking to curb competition from lower-cost stablemate !!!error: Indecipherable SUB-paragraph formatting!!! , move some of its production to Germany and make the Czech brand pay more for shared technology, company sources told Reuters.

As !!!error: Indecipherable SUB-paragraph formatting!!! struggles to cut jobs and spending at German factories and turn the page on dieselgate, Skoda’s superior !!!error: Indecipherable SUB-paragraph formatting!!! and profitability have intensified the brands’ rivalry within the Volkswagen empire.

VW now wants to reduce what it sees as Skoda’s unfair advantages - combining German technology with cheaper labor - and reaffirm the top-selling brand’s primacy ahead of a wave of new !!!error: Indecipherable SUB-paragraph formatting!!! launches, the sources said.

The tussle between VW and Skoda is reviving tensions at the heart of the Volkswagen group between profits and jobs, and between central control and autonomy for its 12 vehicle brands.

“Instead of devoting our efforts to beating !!!error: Indecipherable SUB-paragraph formatting!!! , we may just be setting up a futile internal conflict,” said one manager.

Once the butt of jokes, Skoda has blossomed under 26 years of VW group ownership into a successful mid-market carmaker, steadily winning business from rivals - including VW - and surpassing even !!!error: Indecipherable SUB-paragraph formatting!!! operating profit margin last year.

At the same time, VW is facing thousands of job cuts as management moves to trim excess capacity at German factories. Its powerful domestic unions see Skoda’s success as both a threat and a potential lifeline.

VW workers’ representatives are now demanding the transfer of some Skoda production to their underused German plants, a source close to the supervisory board told Reuters. The proposal aims to offset declining output of the !!!error: Indecipherable SUB-paragraph formatting!!! and aging !!!error: Indecipherable SUB-paragraph formatting!!! that could otherwise threaten more jobs.

They are also making the case that Skoda should pay higher royalties to use VW’s main common vehicle platform. The so-called MQB architecture also underpins mid-sized models from the group’s Audi and SEAT brands.

Responding to the news, Czech Prime Minister Bohuslav Sobotka said he would meet Skoda management and unions to ask for clarification.

The government will seek to ensure that VW investment plans are followed through and that “production is not moved outside the country,” a statement released by Sobotka’s office said.

Skoda’s main union warned that a production shift could cost as many as 2,000 jobs. VW’s works council declined to comment.

VW brand Chief Executive Herbert Diess is leading a parallel management effort to shield future VW models from direct competition with cheaper Skodas.

At a recent group executive committee meeting, Diess called for greater differentiation between VW and Skoda target markets and clientele, particularly for future electric models, three managers with knowledge of the matter said.

“The future positioning of brands is being looked at, but discussions are still ongoing,” a VW group spokesman said, declining further comment.

Tension is expected to rise ahead of a Nov. 17 supervisory board session due to approve annual investment budgets across the world’s biggest carmaker.

LABOR ADVANTAGE

Skoda’s operating profit more than doubled over three years to 1.2 billion euros ($1.4 billion) in 2016, lifting its profit margin to 8.7 percent - second only to !!!error: Indecipherable SUB-paragraph formatting!!! within the Volkswagen stable.

The VW brand, whose margin dipped to 1.8 percent after earnings fell by a third, still outsells Skoda globally but is growing more slowly in Europe.

Skoda’s healthy profits partly reflect the shared car platform’s economies of scale. Designed by VW engineers in Germany, MQB has been rolled out progressively since 2012.

But Skoda gets a further boost from cheaper labor. Manufacturing wages average 10.10 euros per hour in the Czech Republic, where most of its !!!error: Indecipherable SUB-paragraph formatting!!! are assembled, compared with 38.70 euros in German industry, according to Berlin’s official statistics office.

How VW group CEO Matthias Mueller might resolve the dispute remains unclear. The clout of the German unions, which hold half of the company’s 20 board seats, means Skoda’s success may be viewed more as a problem than a model to emulate.

The German state of Lower Saxony, which occupies another two board seats, is also preoccupied with preserving VW jobs.

Unease at VW’s Wolfsburg headquarters has been compounded by car reviews in which its models have sometimes lost face to cheaper Skoda cousins sharing the MQB platform.

The new Skoda Kodiaq sports-utility vehicle (SUV) is priced 1,500 euros ($1,765) below the !!!error: Indecipherable SUB-paragraph formatting!!! yet trumped the German brand in a quality survey by Auto Motor und Sport magazine. Skoda’s Superb also drew favorable comparisons with the !!!error: Indecipherable SUB-paragraph formatting!!! .

Skoda denies any deliberate encroachment on VW’s turf.

“We mainly attract customers from outside the VW group and that is also our mission,” brand CEO Bernhard Maier told Reuters in a interview.

ELECTRIC FUTURE

Competition for resources among VW brands is nothing new. Unions lobbied for VW to lead development of emerging-market cars, but Skoda was allowed to take charge.

Now the group’s 20 billion euro push to launch 50 electric cars by 2025 has brought tensions to a head as VW managers fear their battery-powered models may also be undercut, people with knowledge of the discussions said.

“The !!!error: Indecipherable SUB-paragraph formatting!!! market is a new ball game where you cannot simply maintain the brands’ positioning,” said one. “Customers need to see that you are making changes.”

VW and Skoda both plan to introduce coupe-styled electric SUVs in 2020 boasting the same 500 km (300 mile) range.

Any renegotiation of platform cost-sharing could also affect each brand’s contribution to the new MEB platform being developed for electric cars.

In public, however, VW has played down the rivalry. With a combined lineup approaching 100 vehicles, brand CEO Diess said, there is always some risk of stepping on toes.

“There will always be some substitution,” he told Reuters. “But some internal competition is also helpful.” ($1 = 0.8491 euros)

Reporting by Andreas Cremer; Additional reporting by Jan Lopatka in Prague; Writing by Laurence Frost; Editing by David Clarke

pip bip - choose Corrour > Svend 10/06/2017 at 06:11

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Skoda could probably do even better with some cars with less technology in them to go up against Dacia

Svend > pip bip - choose Corrour 10/06/2017 at 06:13

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Don’t tell VW that.

duurtlang > pip bip - choose Corrour 10/06/2017 at 06:31

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Less profit margin but also less lineup overlap. Nowadays Skoda and VW are way too close to each other imho. Both sell well, so I guess my opinion isn’t that valid.

pip bip - choose Corrour > duurtlang 10/06/2017 at 06:55

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From what I can see they are too close.

Skoda need to return to their roots somewhat by dropping tech, electric windows etc on base trims

Bman76 (hates WS6 hoods, is on his phone and has 4 burners now) > Svend 10/06/2017 at 08:16

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cough... Saturn 2.0... cough

AuthiCooper1300 > Svend 10/06/2017 at 08:34

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Actually I am surprised it has taken this long to flare up.

What I find most interesting though is that Skodas seem to be better assembled than VWs in spite of the huge difference between what a German worker and a Czech worker get paid for doing basically the same stuff.

The knee-jerk reaction – let’s move Skoda production to Vaterland – will not really solve VWs problems, but it will damage the Skoda brand due to its “suddenly acquired” lower quality.

The intelligent thing to do would be the opposite – moving VW production to the Czech Republic... but good luck with that.

AuthiCooper1300 > pip bip - choose Corrour 10/06/2017 at 08:42

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From a point of view of perceived quality (whether it is true or not is immaterial) Dacia is way lower than Skoda.

Besides, why should they? What VW has to do is fix its real quality problems.

Years ago Piëch had the idea of pitching VW as a “premium brand” (on par with Audi, BMW, Mercedes) to the nouveaux riches from, say, China. (Hence the Phaeton, for example). The rationale was that those buyers would not been have brainwashed by decades of Mercedes-Benz/BMW marketing, reputation or history and they would believe VW was in fact on par with them.

VW did shoot upmarket and its line up grew exponentially in sophistication, but the new wealthy elite from those countries did not bite, or not as much as it was expected.

AuthiCooper1300 > pip bip - choose Corrour 10/06/2017 at 08:46

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If they did that their cars would be even more reliable and even better value!

Arguably the fact that some of the toys inside Skodas are not quite as new or complex as the ones inside VWs and Audis may be one of the reasons why they don’t go back to the dealership so much.

Conclusion: Skoda going downmarket would actually damage VW even more.

Dave the car guy , still here > pip bip - choose Corrour 10/06/2017 at 09:02

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Bring Skoda to the US

Svend > AuthiCooper1300 10/06/2017 at 17:01

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They could move the production of the VW Touareg, Porsche Cayenne and Audi Q7 out of Bratislava, Czech to Germany but that would be shooting themselves in the foot as they’d have to set up a production line and pay the higher labour rate.

Chariotoflove > Svend 10/06/2017 at 22:36

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So VW wants to hobble Skoda so they don’t out perform big brother. How stupid is that?

Here’s an idea, let some of the German employees that are getting downsized move to work in the Czech factories. Any takers?

Svend > Chariotoflove 10/07/2017 at 00:12

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Seems it’s more management wants Skoda to stop taking their sales and the workers unions (that are having staff hours cut back and some staff being lost) want more of Skodas pie because they are the parent company workers so why should they lose out when they are the superior brand, parent brand employees.

Chariotoflove > Svend 10/07/2017 at 00:23

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Except it’s cutting off their nose to spite their face. When something is making profit, you let it do its thing.

Chariotoflove > Svend 10/07/2017 at 00:28

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Svend > Chariotoflove 10/07/2017 at 00:42

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It’s the jealous older brother thing though.

Svend > Chariotoflove 10/07/2017 at 00:43

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I’ve posted something over there. Any questions, fire away.

Chariotoflove > Svend 10/07/2017 at 13:18

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“Mom always liked you best; so, I’m taking you down!”