Volkswagen seeks to suppress competition from Skoda

Skoda Rapid images

Volkswagen supervisors and unions are looking to suppress competition from lower-cost stablemate Skoda, move a few of its production to Germany and make the Czech brand name pay more for shared innovation, company sources informed Reuters.

As the automaker is having a hard time to slash jobs and expenses at German factories and moving forward dieselgate, Skoda’s exceptional car reviews and profitability have heightened the brand’ competition within the Volkswagen Group.

Volkswagen now wants to lower what it views as Skoda’s unreasonable advantages – combining German technology with cheaper labour – and reaffirm the brand’s primacy before the wave of new electric vehicle launches, the sources stated.

The tussle between Volkswagen and Skoda is restoring stress at the heart of the Volkswagen group between revenues and jobs, and between central control and autonomy for its 12 vehicle brands.

“In place of dedicating our efforts to beating Tesla, we may just be establishing a futile internal conflict,” stated one supervisor.

Skoda has progressed under 26 years of VW group ownership into an effective mid-market automaker, progressively winning business from competitors – consisting of VW – and exceeding even Audi’s operating profit margin in 2016.

While Volkswagen is dealing with thousands of job cuts as management relocate to trim excess capacity at German factories. Its effective domestic unions see Skoda’s success as both a threat and a possible lifeline.

VW workers’ agents are now demanding the transfer of some Skoda production to their underused German plants, a source close to the supervisory board informed Reuters. The proposal intends to offset declining output of the VW Passat and aging Golf that could otherwise threaten more jobs.

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