Volkswagen’s brand Skoda stated it might outsource some production to a contract manufacturer as the division seeks to reply to increasing demand.
Currently grappling with stretched capacity at its Czech plants, demand for its recent sport-utility vehicles could lead production at Skoda to increase to 2 million cars by about 2025 from 1.2 million presently, the automaker stated.
VW’s labor boss Bernd Osterloh last week informed Reuters that moving some production to Germany by 2019 will not solve bottlenecks at Skoda, that has passed Audi to become the second-most profitable unit at VW group following sports-car brand Porsche.
“There is a large range of options to cover order peaks,” Skoda stated in an emailed response to a question from Reuters, stating that taking advantage of unused capacity in the multi-brand Volkswagen group will not do the trick.
“For that reason we keep looking into alternatives that also include possible contract manufacturing,” Skoda stated. “Demand is exceeding our production capacities also in 2018.”
Major automakers consisting Germany’s big three BMW, Daimler and Volkswagen routinely use contract manufacturers including Magna or Finland’s Valmet Automotive to outsource production, achieving greater flexibility while saving investments in their own centers and resources.
Valmet is employing up to 1,000 new staff this year to assist build the Mercedes GLC sport-utility vehicle and the new A-Class compact.
Osterloh stated on a decision of how to boost Skoda’s production will likely be reached by November when the automaker’s supervisory board, of which he is a major member, is due to ratify the German group’s rolling budget on capacity, technology and equipment.