So Volkswagen think Skoda are too cheap

[Sad555]

After reading an article in AE  it appears that Volkswagen feel that Production costs are too low in CZ and Skoda are undercutting Vw  in Germany  and would like to bring production back to Germany causing big job losses in CZ.

[ronime]

I can only assume that AE are taking VWs comments out of context. They cite the Kodak undercutting the Tiguan but seem to forget that they are both made in the same factory (in Germany).

 

Then there is the mega factory in Slovakia that makes the Bentayga, Cayenne, Q7 and Touareg. They don't seem to have a problem with using cheap labour to bolster profits on those models. The same factory also makes the Up!, Mii and Citigo and it would almost certainly be unprofitable to make those models in Germany.

 

Usual crap journalism and fairy stories from AutoExpress. What they don't know they seem to make up. A complete joke.

[roo]

It's not come from auto express, they've got it from Reuters

https://www.reuters.com/article/us-volkswagen-skoda-exclusive/exclusive-vw-seeks-to-curb-competition-from-skoda-sources-idUSKCN1C91EC

 

It looks like skoda has the 2nd highest profit margin in vag. And rather than adjust themselves to improve Volkswagen profit margin and underused capacity by closing plants or changing working practices, the unions want to stifle skoda and improve vws profit by either charging more for their share of the tech costs or by moving production to Germany where labour rates are 4× more (€10ph vs €38ph).

Edited 6 October, 2017 by roo

[Svend]

((sorry I couldn't post in the news section))

 

https://www.autoblog.com/2017/10/04/volkswagen-feuds-with-thriving-stablemate-skoda/?utm_source=spotim&utm_medium=spotim_recirculation&spotim_referrer=recirculation&spot_im_comment_id=sp_K1uZhoSA_23232983_c_v5UB0O

 

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

As VW struggles to cut jobs and spending at German factories and turn the page on dieselgate, Skoda's superior car reviews 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 electric car 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 Tesla, 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 Audi's 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 VW Passat and aging Golfthat 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 Porsche 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 European cars 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 VW Tiguan yet trumped the German brand in a quality survey by Auto Motor und Sport magazine. Skoda's Superb also drew favorable comparisons with the Passat.

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 electric vehicle 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

[freelunch]

In my best Arte Johnson accent: "Verrrry interesting."

[facet edge]

Just look at the Labour charges, 10.10 compared to 38.70 in Germany.

Makes you wonder how they mange to make any cars in Germany.

[ronime]

Hmmm... you have to wonder whether the resurgence of nationalist sentiment in Germany is driving this to a certain extent. It would be sadly ironic if after some 80+ years VW came full circle and returned to making cars for the benefit of Germany's National Socialists. Major Ivan Hirst would be spinning in his grave. :(

 

Still, if things get any worse in Catalonia then they could always shift production back to Germany from Martorell ...

 

 

Edited 6 October, 2017 by ronime

[Rooted]

VW Group are to be building the T-Roc in Palmela Portugal.  

 All balls buffets and banquets and headless chickens.

http://inside.volkswagen.com/New-model-for-Palmela.html 

Edited 6 October, 2017 by Headinawayoffski

[ronime]

i remember when the Sharans, Alhambras and Galaxys that came out of there were plagued with quality issues. Thankfully the Sciroccos seem to be better built.

[Rooted]

^^^ Lots of coolant under the bridge or H2o running out of door seals since then you might imagine.

 Long time ago was that not?

http://en.wikipedia.org/wiki/AutoEuropa 

Edited 6 October, 2017 by Headinawayoffski

[ronime]

Production ended in 2006.

[Rooted]

Exactly, so a decade ago. 

But then that never is a guarantee that VW Group up the game.

 

They maybe have an issue in the Czech Republic with so many of the best workers being employed by Hyundai.

VW Group need Skoda CZ to up the game with Quality Control, maybe rejecting more poor parts sourced or manufactured by VW.

[cheshire_cat]

maybe it's one eye on job losses in the fatherland with the electric car revolution coming down the pike

[john999boy]

Two similar topics merged.......

[Gumby]

When I first read the Reuters article,it felt it was just re-affirming what we the Skoda community knew already- that VW try and keep Skoda at the bottom of the pile in terms of tech, innovation and price etc.  However it doesn't look like it's worked for them and now the rest of the group at getting jealous. 

 

That being said, I find it sad that they've got into this situation if true. Joining the VW group did wonders for Skoda and brought them out of the communist era and made them what they are today.  If that relationship were to end or be set back 10 years...well i don't want to think what it would be like ☹.

[Guest]

1 hour ago, Gumby said:

That being said, I find it sad that they've got into this situation if true. Joining the VW group did wonders for Skoda and brought them out of the communist era and made them what they are today.  If that relationship were to end or be set back 10 years...well i don't want to think what it would be like ☹.

Better customer relations?

Dealers that actually care?

Better build quality?

Reliable vehicles?

I'll take that 10 year deficit over the state of what Skoda is today.

[threadbear]

Having had an Octavia II, a Fabia Il estate, then an unreliable two years with Polo and now back to an Octavia III, I think that is my indication of my experience of VW. 

 

10.10€ per hour in the Czech Republic is surprising but 38€ per in Germany in shocking. 

[roo]

€38 is roughly £34 at the current exchange rate.

Say they work a 35 hour week, that's  £61k per year!

€10 is £9 so for a 35 hour week, that's  £16,380.

To be fair, that is not explicitly what skoda and vw pay their workers, but the average wage for manufacturing in each country, although you can probably safely bet that skoda is closer to the Czech average than the German and visa versa with vw.

Edited 9 October, 2017 by roo

[Rooted]

Why Audi / VW invested so much in building manufacturing / engine plants in the EU country of Hungary which is not in the Euro Zone as if has the Forint (HUF),

also not the problems with lack of electricity generation like in Germany. 

Nuclear Power Stations built with Russian money and the gas pipelines passing through Hungary from Russian and from the south.

 

Vorsprung Durch Technik, use who and where you can until finally the Unions tell you what you have to do and then bring it all back home, 

well if you can afford to from the reduced workforce you have, so you need migrant workers, no different from the UK or the USA in Germany.

Or just say you are going to bring back the work to the born and bread in your country, and say you are stopping ] investing in other countries where the wages are lower.

Where Suzuki build cars and where VW had 20% investment in Suzuki until the eve of the VW Emissions Scandal breaking, where they had raided their R&D and knowledge they had from previous partnership, where IBM and others have big investments because of the highly skilled work forces in Manufacturing and Electronics.  Where the TDI / Electric / Turbo-Supercharger Factories are and where Audi / VW had made their future plans for the next decades until they were found out to be lying cheats, so the Endurance Racers & all the Diesel / Hybrid research / sponsorship was worth Jack Sh!-t.  Pull out of all that 24 hour racing stuff etc. Diesel is not the Green Environmental Future 'Yet'.

http://hipa.hu/audi-s-recent-investment-in-gyor-is-a-milestone-in-electromobility 

Edited 9 October, 2017 by Headinawayoffski