Skoda already has a response to the Volkswagen tantrum the Czech Republic will remain its first home.
By: Fedora Atjeh | Oktober 12, 2017
A few days ago a 'small' internal conflict erupted in the Volkswagen Group: the managers and unions of the German firm are not looking favorably on the course of success that is taking the production of its Czech brand Škoda. They ask you to pay more for the shared technology and to transfer part of your production to Germany.
But Škoda already has an answer. The CEO of the firm, Bernhard Maier, has stated that the Czech Republic will remain the home of Škoda, adding local jobs to meet growing demand. "Our Czech factories are, and will remain the first choice," he said.
Volkswagen is in a moment of cuts in the squad after the Dieselgate, and its powerful unions see the success of Škoda as a threat. Thus, from Germany they want to bring productive capacity of the Czech Republic and that, by the way, their peers pay more for the technology shared.
But they have been backfired because at the moment, Volkkwagen will not benefit from the success of Škoda, which sold 1.13 million vehicles last year. It has thus become the second most profitable brand of the VAG Group after Porsche in terms of operating margin and is in the record sales target in 2017, as reported by Automotive News.
"Škoda is running to the brink of its ability, which is evidence that our strategy is working," said the CEO of the Czech firm, which met with other players in the industry to discuss the conflict. Maier also revealed that Škoda had salaried 3,000 workers in recent months and planned to hire more "to meet growing demand."
Maier made very clear his response to the Volkswagen tantrum in a letter to its workers: Škoda will only make use of Volkswagen's manufacturing network to deal with peak demand, but Czech factories will continue to be the first choice.
According to Automotive News, the tension between the brands will rise before the Supervisory Board meeting on November 17, during which the annual investment budgets for the group will be approved.
Škoda's profit margin was 8.7% last year, while Volkswagen's profit margin was 1.8%. With a policy of cuts implemented for a couple of years, the German brand seeks to cut costs, and for the moment has occurred to create a new division of automotive components.
This new division could unlock funds for its transition to electric vehicles. Volkswagen said on Wednesday it plans to assemble parts manufacturing, including engines and transmissions at 56 plants on five continents with a total of 80,000 employees.
The company said it wants to integrate its component operations under a unified structure. The new entity "will group these activities, organize them even more efficiently, reinforce internal competencies in specific areas and drive the transition to electric cars across the group," Volkswagen said.