VW have decided to move Škoda upmarket:

 

From Automative News (subscription required)

 

http://www.autonews.com/article/20140306/ANE/140309892/vw-rethinks-skoda-and-seat-strategy-in-mass-market-stru

 

 

 

 

March 6, 2014 10:51 CET

GENEVA (Reuters) -- Volkswagen Group is striking out in a new direction to boost the image and appeal of its Skoda and Seat brands, moving Skoda more upmarket while refocusing Seat on Europe after a failed China export strategy.

 

Czech-based Skoda is trailing ambitious sales targets and Spanish carmaker Seat is battling a decade of losses.

 

The European auto slump caused Skoda deliveries to fall 2 percent last year to 921,000, well short of a 2018 goal of 1.5 million. Sales at Seat were up 11 percent at 355,000, but underutilized capacity served to extend its long run of losses.

 

By contrast, French carmaker Renault's budget models helped it to defy a weak Europe and score significant gains in emerging markets, with a particularly strong showing from its no-frills Dacia brand.

 

Previously positioned as VW's budget alternative for eastern Europe and Asia, Skoda will target more affluent buyers in future, its CEO, Winfried Vahland, said at the Geneva auto show.

 

Skoda unveiled its elegant Vision C concept car in Geneva, its first coupe alluding to a more dynamic styling of future vehicles - the five-door model has enclosed door handles and triangular headlamps. "We never before expressed passion in our products," Vahland said. "It's like the brand is growing up."

 

Similarly, Seat is countering its image as the eternal money loser of the VW group by offering more variants of its Leon model and sharpening its focus on rebounding European markets.

 

Though reducing non-production staff and administration, it's unclear when the Spanish business will return to profit, CEO Juergen Stackmann said at the show. Seat has amassed 1.5 billion euros ($2.06 billion) of losses since 2005.

 

The brand is now reaching beyond its traditional base of young city dwellers, targeting families and fleet operators with the Leon ST, its first compact station wagon. The model has attracted 20,000 orders within weeks, Stackmann said.

 

 

No. 1 goal

 

Without a turnaround in mass markets for VW, Europe's No.1 automotive group could struggle to surpass Toyota as the world's biggest carmaker by 2018. In the nearer term, failure to get to grips with the lower-cost brands is likely to weigh on its share price.

 

"VW needs a compelling presence in volume segments and emerging markets if they're serious about clinching the top spot and retaining it," said Stefan Bratzel, head of the Centre of Automotive Management think-tank near Cologne.

 

Regardless of whether it surpasses Toyota, VW must succeed in lower-cost categories to remain a force in a volume segment that brings the economies of scale required to meet its profit goals. Skoda and Seat accounted for 13 percent of VW's 9.7 million record sales last year.

VW rejected suggestions that the change of tack may renew past friction between Skoda and Seat and with the core VW division.

 

The VW group has 12 brands and about 300 distinct models. In 2009 the Skoda Superb trumped the more expensive VW Passat in quality surveys and offered features that were priced as extras in the Passat. The upscale shift ruffled feathers at VW, resulting in the departure of Skoda's then-CEO.

 

"Why should Skoda build only practical cars," VW Chief Executive Martin Winterkorn told Reuters. "However, we must ensure precise distinctions are made between the brands, that the brands interact well and that everyone finds their corner."

 

 

Targets may fall short

Forecasters, however, remain skeptical that VW's shake-up will have the desired effect.

 

"VW has such a spread of the [volume] market with the likes of Skoda and the VW brand. Seat doesn't fit right with that portfolio," said Jonathon Poskitt, head of European forecasting for specialist analyst LMC Automotive.

 

Seat deliveries could rise 30 percent to 462,000 cars by 2018, research firm IHS Automotive estimates, still short of Stackmann's goal of 500,000. Sales at Skoda, meanwhile, could grow by 26 percent to 1.16 million vehicles, the forecaster says, against a target of 1.5 million.

"I view myself as a member of a relay team taking part in a marathon run," Stackmann said. "It's a tough business."

 

Stackmann said Seat is considering building cars in China. Plans by his predecessor to expand to China from Seat's base in Martorell near Barcelona failed because of high import duties and distribution problems, Stackmann said. Seat sold a dismal 1,100 cars in the world's biggest market in its first full year there in 2013.

If they move budget brands upmarket, what can you sell to people that want a half decent car on a budget?

If they move budget brands upmarket, what can you sell to people that want a half decent car on a budget?

 

Ha...  what do you think? The Evil master will of course create a NEW one of their own to slot into the bottom of their empire:

 

http://www.theglobeandmail.com/globe-drive/new-cars/auto-shows/vw-budget-car-plan-stalls-as-struggles-to-meet-cost-targets/article17285504/

 

Though the poor sods are struggling a bit to make it work. 

If Skoda moves upmarket, maybe they'll bring Bugatti down to compensate    

Some models are already overpriced!

If they move budget brands upmarket, what can you sell to people that want a half decent car on a budget?

 

 

Good question.

 

As noted in the article, Renault have taken more interest in their Romanian brand, & y using only one (new?) platform for the entire current Dacia range, + lower than normal for Europe production costs, have produced a range of car that sell well & are profitable for Dacia / Renault.

 

VW will always have a problem with Skoda, in that the current & probable future product line-up is a little cheaper than a VW equivalent, but not obviously "budget" enough to keep potential VW purchasers out of Skoda salesrooms.

 

SEAT is much more of a problem, it's was a a joint Govt. / FIAT company building FIAT based cars, some unique to Spain under licence from FIAT.

VW purchased the company  to enable it to sell cars into a then very-restricted import market, by building VW branded cars in the the SEAT plants. (ISTR that the Polo was the 1st VW car built there).

It no longer has a commanding market share in Spain & seems to be undersold elsewhere in Europe.  

 

Perhaps it is of interest that Ford Motor Company also felt that Spain would be a cheap place to build & sell it's 1st FWD car, (Mk1 Fiesta) & also 'cos the Spanish (Pre EU) govt.

would then sanction the import & sales of the rest of the Ford range in Spain.

 

When I used to holiday in Spain, back in '69 to '73, there were many unavailable European brands, the local car market was dominated by SEAT & Renault, Chrysler-Simca & British Leyland, much to my surprise. They all had assembly plants in Spain, even BL & often with unique models.

(Imagine an Austin 1300 with the front & rear ends of a Triumph Dolomite!)  

 

To get back OT, VW have already stated that they want to create a new range of budget vehicles, to be sold under the Skoda & SEAT ranges, but they've not indicated where they would be built, or what they would be called. 

Ha...  what do you think? The Evil master will of course create a NEW one of their own to slot into the bottom of their empire:

 

http://www.theglobeandmail.com/globe-drive/new-cars/auto-shows/vw-budget-car-plan-stalls-as-struggles-to-meet-cost-targets/article17285504/

 

Though the poor sods are struggling a bit to make it work. 

 

I wish I'd read your post before I started rambling on...............

 

Good article,  full marks to a Canadian newspaper........

 

DC

Like VW, Skoda's vehicles are already overpriced. Having been at the Britannia Stadium a couple of weekends ago (ugh) I took the opportunity to pop into the SEAT garage on the same complex. The Toledo is currently being sold for well under the price of the Rapid and has more kit in it. Why would I pay £3k more for the same product with less stuff in it? Not sure what VW is playing at but the idea of a Skoda for us has gone out the window. 

 People won't simply keep handing over money for a VW when Ford knocks out the excellent Focus for less money. The same is true of the Skoda badge, who will be so desperate to own a Skoda that they'd overlook rivals costing far less? Time is coming when I won't be bothering to consider a VAG motor over alternatives. 

Fords are absolute crap ! As for skoda going upmarket they'll have upgrade the interiors plastics first , the cabins are a little 3rd world so vw needs to let skoda get on with it and let them use every material and engines they need to deliver a wonderful car, my Octavia 1.9 glxi of 15 years ago felt more luxurious than some of the new models , seat seem to grabbing the bull by the horns and producing better looking cars with better interiors for less money ? Also the likes of kia and Hyundai will start to take the thunder of the lower divisions fairly rapidly

Edited 11 March, 201412 yr by seboni121

Every budget car brand has been doing this for the last few years. Like changing suppliers to improve quality or adding extras once found on more luxury brands. Gone are the days when you could buy a brand new 5 door family hatch for less than 10K

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Fords are absolute crap ! As for skoda going upmarket they'll have upgrade the interiors plastics first , the cabins are a little 3rd world so vw needs to let skoda get on with it and let them use every material and engines they need to deliver a wonderful car, my Octavia 1.9 glxi of 15 years ago felt more luxurious than some of the new models , seat seem to grabbing the bull by the horns and producing better looking cars with better interiors for less money ? Also the likes of kia and Hyundai will start to take the thunder of the lower divisions fairly rapidly

I also detest Fords BUT they are doing something right.

No.1 seller in the UK last year was the fiesta.

No.2 seller was the focus.

And they were out front by a long way.

They look the part but shocking under the skin

Tbh they make nothing to last nowadays.

Old tackle is the best tackle

New tackle is jerry tackle

Fords are absolute crap ! As for skoda going upmarket they'll have upgrade the interiors plastics first , the cabins are a little 3rd world so vw needs to let skoda get on with it and let them use every material and engines they need to deliver a wonderful car, my Octavia 1.9 glxi of 15 years ago felt more luxurious than some of the new models , seat seem to grabbing the bull by the horns and producing better looking cars with better interiors for less money ? Also the likes of kia and Hyundai will start to take the thunder of the lower divisions fairly rapidly

 

 

 Problem is Seboni (barring the Passat) I don't keep my cars for much over three years. A top end Focus weighs in at several thousand less than a Golf, is good to drive, has lots of kit, revolutionary engines and ultimately will be down the road before anything major theoretically goes wrong. Though I vowed never to own one, my mate's ST2 is a proper piece of kit for an unbelievable price. I'm not going to be held to ransom over brand loyalty and i'm not going to be paying hand over fist for what I can have elsewhere. My purse isn't bottomless and neither is my resolve to keep paying more and more for cars.

Edited 11 March, 201412 yr by sparks03

If they move budget brands upmarket, what can you sell to people that want a half decent car on a budget?

 

Dacia?

Sparks yes I understand where you are coming from son is at a fords garage and most of the mechanics if not all hate them, there are plenty of st here and man they sound good ! , I generally keep a car for less than 3 years only 12 months usually , however I love this golf it's an amazing car , however I'm still looking at changing it every week I couldn't go back to skoda even though I love them , the build quality isn't as good I've been with skoda for 30 years and I was done like a kipper by the dealer so I'd be wary, fords have never appealed to me at all

Jen would happily spend big on a Mk7 Golf but i'm starting to question whether or not i'd be happier with an A3 and I can't help noticing the deals at our local Mercedes and BMW garages. The prices are now starting to overlap and what i'd be expected to pay for an Audi/ Beemer/ Merc isn't what i'd be expecting to pay for a VW and certainly not a Skoda. 

 

 Just double checked on Ford's website, a Focus Titanium X stacked out with kit is £4,900 cheaper than the Golf we've priced up. That's enough money to fund next year's holiday, replace the television in our living room, get the hall and landing plastered with a new carpet through same and have two new sash windows made for upstairs. A fully kitted out 308, an impressive vehicle by all accounts, including heated, power leather seats is still £3k less. An Astra GTC 195bhp diesel is £2k fully loaded. Hell for the same price I could be picking up the Leon FR 280! 

 

 There is no justification for the pricing structure of VW at the minute.

I was talking to some of the media/press team today and raised this subject, didn't see thread as HUD in citigo does not do live web streaming; yet. Although I raised it in a slightly different way. 

 

On the back of the autoexpress article advert it's clear; it's why I brought one, that 11 years or more ago, a Skoda was a value alternative. Maybe a third if not more below the comparable A4/Golf. Today it's not quite as clear cut and the above indicates it's not meant to be.  

 

I think the buzz word is desirable. A BMW makes no sense to me, but given the choice, taking money out of it, I'd desire one, a 335i though

 

So because many people buy bmw, they don't on economics  to toys ratio, they must for desire or perhaps the good old snobbery perception. So desire can go a very long way towards eeking more $$$ out. I believe there is a real danger to this plan if supply does not keep up. Or perhaps this is a clever macro economic way of reducing build demand :p

Fords are absolute crap !

Well that's your uninformed opinion, after driving them for the last 8 years I can offer a different informed opinion. Perhaps your son's garage is just one example of the many poor dealerships out there. I think that they share technology with volvo and other manufactures kinda point to them being rather decent.

They've already jacked the Skoda prices up to an unrealistic level for what the cars and the brand offer.

If they want to justify prices, they will need to work harder with the design if the cars and the quality of the dealer network / experience. For all the inflated prices, Skoda dealers remains a pretty budget experience.

Couldn't they have got rid of Seat and kept Skoda cheap?

Skodas should be, utilitarian, dull and cheap ... They will never be upmarket, exciting or aspirational!

VAG's budget brand will remain as Seat.

I bought our last three Skoda's because they were re-badged VW's for a lot less cash. The poor brand image was offset by the savings.

 

The current range from Skoda remain as re-badged VW's but now for only a little less cash.

 

For me the incentive to buy a Skoda has gone and as a result it is unlikely my next car will be a Skoda.

An Astra GTC 195bhp diesel is £2k fully loaded.

At that price I may even consider one!

If they move budget brands upmarket, what can you sell to people that want a half decent car on a budget?

 

Dacia

 

More seriously, in the same way that individual models get larger with each generation until there's room to slot a new car in beneath them, the same thing can happen with entire brands.

At that price I may even consider one!

 

 

 Be prepared to do a lot of DMF and turbo replacing.