Volkswagen’s Czech division Skoda stated it will move some production of sport-utility vehicles (SUVs) to Germany to meet increasing demand for its models.
Executives at Europe’s largest automotive group and its Czech subsidiary have been finding out ways to increase output at Skoda, which consist building of a new factory outside the brand’s Czech home, to help it keep up with rising demand, company sources informed Reuters in March.
On Monday, Skoda stated it will assign some production of its new Karoq SUV to a Volkswagen (VW) plant located in Germany’s northwestern town of Osnabrueck from the beginning of the end of this year and in 2019 to fulfill high demand for the model.
The automaker’s factory in Osnabrueck, which also constructs the Porsche Cayenne SUV, will paint and assemble the Skoda Karoq, but the move is going to be temporary with the bulk of Karoq production planned to remain in the Czech Republic, Skoda stated.
Volume brand Skoda has grown under almost 30 years of VW ownership to become one of the German group’s profit drivers, even surpassing luxury brand Audi’s operating margin, due to cheap labor and to VW’s cost-saving modular platforms.
Skoda’s superior car reviews and commercial success repeatedly caused tensions within the VW group as the major namesake brand grapples with expenses for the “Dieselgate” scandal while pushing painful restructuring consisting of thousands of job cuts.
In 2017, Volkswagen managers and labor representatives were looking to curb competition from Skoda by shifting some of its production to Germany and make the Czech unit pay more for shared technology, sources informed Reuters.