Latest article about Skoda from slovak newspaper:
https://ekonomika.pravda.sk/firmy-a-trhy/clanok/630257-sef-skoda-auto-na-slovensku-fabiu-ci-karoq-dodame-od-5-do-6-mesiacov-ceny-pojdu-asi-o-par-percent-hore/
Google translate:
Skoda Auto head in Slovakia: We will deliver Fabia or Karoq in 5 to 6 months, prices will go up by a few percent
The car can be manufactured without spare parts, such as control units or door panels. It passes the inspection and is exported to the parking area, where it waits for its completion. Another thing is cable harnesses, without them we can't easily assemble a car, says Jaroslav Hercog, head of Å koda Auto Slovensko, in an interview for the daily Pravda.
Tomáš Bakoš 06/13/2022 16:41
The Mladá Boleslav-based carmaker Škoda Auto still does not produce to the maximum capacity. The problem is the lack of parts. So what is the situation, what parts are missing from carmakers?
Not only the automotive industry is facing the impact of covid, which has brought about the severance of logistics ties, the closure or reduction of production at suppliers. Gradually, individual waves came with various constraints, which manufacturers and suppliers gradually adapted to a number of measures to ensure uninterrupted production. At the time of the covid, demand for chips from cars, where the rise was expected to be slow, was shifting to chips in consumer electronics as people spent much more time at home. This created an imbalance between supply and demand, which caused a second blow to most car manufacturers. Again, we said that worse things couldn't have happened anymore, and we had no idea what was coming on February 24 this year.
Did the war in Ukraine come and with it other problems with works?
Apart from the great suffering experienced by the people of Ukraine after the aggression, the war has exacerbated the effects of the shortage of parts even further. Production at many suppliers from Ukraine was discontinued, especially in the area of cable harnesses. However, in a short time, thanks to the great commitment of all parties involved, the production of cable harnesses was at least partially resumed. Our ambition is to continue production in Ukraine, and thus help even in difficult times. That is why we very much appreciate the flexibility of Ukrainian employees, who, even in times of war, were able to at least partially maintain production in the factory. As a result of this situation, we also feel that we need to diversify much more.
Head of Å koda Auto Slovakia: We are launching a novelty, responding to the lack of vehicles on the market:
What exactly does that mean?
Specifically, in our case, this means that in close cooperation with the affected suppliers from Ukraine, we duplicated the production of cable harnesses to the Czech Republic. At the same time, we have secured new production capacity in Morocco. The aim of these measures is to provide even better security against possible future supply disruptions. These measures make it possible, if necessary, to increase current production volumes. Ways are being sought so that the flow of components does not stop. Since October, when production was last discontinued, we are still not going at full capacity, but we have not had to stop production completely.
You mentioned diversification in production. The game is the production of cable harnesses in Morocco. What exactly is there, was it a consequence of the war in Ukraine?
The current situation has taught us a lot and contributed to a reassessment of current practices and customs in relation to globalization. There has been greater diversification and a shift away from globalization. There is a much greater emphasis on securing the supply of components from countries that are less risky, whether from a geopolitical or logistical point of view. In addition to the war in Ukraine, I will cite the example of Asia, specifically China, which, due to zero tolerance for the covid, closes repeatedly and ships not only cannot sail, but there is no one to lock them for lockdowns, thus disrupting supply chains.
However, I do not think that we will produce everything in Europe in the future. We do not have the capacity, the resources of the materials, the staff, nor the necessary investments to do everything at home. However, manufacturers will be very careful to be able to provide at least some of the key components directly, thus ensuring greater control over deliveries.
Which parts are still affected? We know that only a handful of companies make chips. Is it possible to diversify it at all with chips?
The production of chips is very demanding in terms of investment and technology. Manufacturers are located mainly in Asia - in Taiwan or Malaysia. It is a matter of several years to move such a factory to Europe. It will certainly happen that Europe will try to start producing some strategic components such as chips locally, which is already happening and that is good. Well, I don't think we'll be producing all the parts that go into cars here in Europe.
Jaroslav Hercog, CEO of Å koda Auto Slovensko.
Carmakers are missing parts. How are we to imagine what happens to vehicles, incomplete vehicles leave the production line and are delivered in parking lots?
The car is a complex product that consists of thousands of parts. Without some of them, such as one of the control units or the already mentioned door panels, the car can be manufactured, inspected and exported to the parking area, where it will wait for its completion, as soon as the missing part will be available again. Another example is cable harnesses. Think of them as a network that travels like a car. If we talk about the main cable harnesses, then it is not possible to insert them into the car, because they are placed in the vehicle in the initial phase of car production and are often measured according to the model and equipment, even several kilometers.
What are the current waiting times for vehicle delivery?
The situation is gradually improving. Waiting times depend to a large extent on the selected model, equipment, engine or transmission. We can say that smaller models like FABIA, KAMIQ, SCALA or KAROQ can be delivered from five to six months after ordering, due to the fact that they need a smaller number of critical parts. Of course, even that is still more than we would like. For larger models, it's a bit more. The OCTAVIA model, where the already mentioned fire of the factory for the production of door panels also occurred in addition to the lack of chips, is currently waiting for about 12 months. We are very sorry for this situation. That is why I would like to take this opportunity to thank the customers who are waiting for their cars.
I would also like to mention the fact that our customers traditionally order their Å KODA according to their specific wishes in terms of equipment, motorization or preferred color. The share of such orders with us is up to 80%. Of course, there is also a group of customers who need a car immediately, and here is the opportunity to use the available stock of dealers or the newly introduced program of certified Å KODA used vehicles, which customers will find under the Å KODA Plus banner at our 17 authorized partners.
At the beginning of December, the daily Pravda reported that the price of OCTAVIA or SUPERBA had risen last year. We have 12 percent inflation here, energy prices are also rising, which are additional costs for the plants. Is there a risk of rewriting price lists this year as well?
We are certainly not planning to make our vehicles more expensive at such a high level, but we must reflect on what is happening around us. The prices of materials, energy and other inputs are constantly rising, and we are unable to compensate for these increases in efficiency and increased productivity. Our suppliers gradually pass on the costs to us and we have to compensate some of them by reflecting them in the price. Therefore, it may happen that prices move in the order of several percent. At the beginning of the year, we adjusted the prices and it may happen that due to high prices of materials and energy, prices will continue to move during the year.
What further market development do you expect on the Slovak market of new passenger cars this year?
We see that there is still a strong demand for new vehicles. The number of orders available to our network is at the level of covid years ago, which is a great result of the work of our network of dealers, attractive model offer as well as the trust of our customers. This year, the market could be around 85,000. However, we must also take into account the fact that we are still moving in a very turbulent environment full of unpredictable influences.