Skoda now at “eye-level” with VW, says Skoda

SKODA is now at “eye-level” with Volkswagen when it comes to pricing and positioning in the market, according to the brand’s CEO, Klaus Zellmer.

Mr Zellmer explained that while Skoda was once a “budget brand” compared with Volkswagen, the company no longer occupies that position, but instead plays its part as a value for money alternative, with design also playing a key part in separating the brands.

“I think we're now on eye-level,” he said when asked if Skoda has moved away from its ‘budget’ position in the VW Group of brands.

Mr Zellmer said the Group is working to separate each of the brands based on their specific identities, and a prime example of that today is the differentiation between the Enyaq electric SUV and the VW ID.4 model that share architecture and technology base.

“There are completely different cars. They share the same platform, they share many synergies, many cost-saving potentials were lifted. And this is where we're going.

“We want to spread horizontally to increase our footprint in the market and cover big audiences, and don't step on each other's feet all the time,” he said, indicating that the brands had been struggling with interfering in each other’s market spaces in recent times.

One way in that Skoda will be allowed some free market space – in Australia, and other parts of the world – is that it will offer models like the Superb liftback and wagon, where models like the new-generation Passat wagon is not coming to our market, and the Arteon liftback and wagon have been deleted from the VW range, too.

Mr Zellmer said that offers a chance for Skoda to meet the needs of those buyers who are still shopping for that kind of car.

“We’re going to have both the Combi (wagon) and the limousine (liftback or sedan),” he said. “You know, the Arteon and Passat are going out, and I think that is a perfect answer for that vacuum, potentially.”

Mr Zellmer indicated the brand understands that circa-$60,000 large cars aren’t for everyone, but said he is looking forward to furthering the range of higher-end models, including with fully-electric vehicles, including an EV wagon and a three-row SUV, based on the Vision 7 S concept.

“Now when you say a budget brand now you saw the Vision 7 S, which is certainly our flagship, it's up there and we're very much looking forward to that – that car also will change our identity in a way, but value for money is always important for Skoda and will remain important,” he said.

He also made it clear that a pick-up truck or dual-cab ute is not part of the brand’s plans, leaving that job to the VW Commercial Vehicles arm and the Amarok. “That’s not part of our ballgame,” he said.

Mr Zellmer indicated that while Skoda’s new electric entry-level car due in 2025 – with a price tag of €25,000 (AUD $42,000) – is not a ‘budget’ car for many buyers, that the Skoda brand knows it needs to keep some of its more affordable vehicles around to ensure that customers don’t get pushed out of the brand and shop elsewhere.

“We still have the Fabia, the Scala, the Kamiq, Karoq, Superb, Kodiaq – so the way the market transitions to battery-electric mobility (is fluid) and there's still a vast majority of customers asking for internal combustion engine vehicles and mild hybrids and plug-in hybrids.

“This is what Skoda does – we want to provide choice and if you want to have an ‘A0’ car like a Fabia in that price bracket, yes, this is what we have on offer.”

In Australia specifically the company’s local pricing has skyrocketed in the past four years. In 2019 a Skoda Fabia started at $18,990 drive-away, where today the Fabia range doesn’t include a base model, and the top-spec Monte Carlo is the only current option for buyers, at $38,690 plus on-road costs.

This is just one example of several that have seen significant price jumps in recent times. The Kamiq small SUV started off in Australia at $27,990 drive-away for a base model manual, and today the most affordable version is $35,490 plus on-roads. Karoq pricing has increased too, while the Scala has seen a new de-specified base model with a lower-output engine added.

Mr Zellmer said he understands that the Australian arm of the brand has been through “crazy times” like the rest of the world, but said that the company needed to “stay above water” and that the pricing and positioning on offer is a “work in progress”.

“We are very well aware that there's a bit of homework to do there for Australia and for us,” he said, specifically calling out the lower-end models as needing more attention in terms of affordability.

He also essentially confirmed the expected plans for Skoda Australia to introduce a more affordable version of the Fabia hatchback with a more attainable price-point.

“I know that Fabia has a different price in Australia. We covered that, we need to bring in more derivatives, not just the Monte Carlo. I'm very aware of that,” he said.

Skoda Australia boss Michael Irmer recently said that the brand was looking to get another Fabia variant to help the positioning of the vehicle, but while he admitted the pricing strategy was unexpected for some in the market, he also said that the brand had sold every Monte Carlo it could get its hands on.

Skoda Australia has only sold 288 units of the Fabia to the end of August 2023, which is fewer than Audi has sold of the A1 (293), and that luxury-branded model, which shares plenty with the Skoda, also starts at a lower price point.

The light car market for vehicles over $30,000 is actually up 13.3 per cent year-on-year, with the Fabia having helped push the number upwards, as well as greater availability of the all-electric Mini Cooper.

Light car sales more generally (including sub-$30k models) are down 11 per cent year-on-year.