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Volkswagen underlines support for Skoda Australia

In the woods: Skoda is hoping that a focus on the retail market, with fresh new models like the Yeti will kindle sales.

Underperforming Skoda in Australia for the long haul, says VW Group chief

8 May 2014

VOLKSWAGEN Group Australia (VGA) managing director John White has re-iterated that budget brand Skoda has a secure long-term future here.

Admitting his disappointment at the Czech brand’s local sales performance since its arrival in late 2007, Mr White said this week that more appealing products have already seen a turnaround in the company’s Australian fortunes.

He also singled out a re-emphasis on the retail customer, after the confessed mistake of concentrating too much on the less-profitable rental vehicle market.

However, Mr White added that the volume growth would remain gradual due to the tough market conditions all brands face – a result of Australia's unusually fragmented industry landscape.

“Volkswagen is committed to the Skoda brand in Australia,” he told journalists at the Rapid Spaceback launch in Byron Bay this week.

“But it takes time to break into a crowded market like this one. You have to be patient. We have to wait for incremental increases. Taking one step at a time.

“Are we where we wanted to be? No. But it comes back to product positioning and where we were before.

“We were focussed too much on the rental market but we’ve backed off on that and focussed on the retail market for more sustainable business.

“Plus we’ve brought capped-price warranty and the option of extended warranty – these are the changes that Michael Irmer has brought in.

 center imageLeft: Volkswagen Group Australia managing director John White.

“In fact it was he who put together a business plan that was approved (by senior Volkswagen AG management)… and part of that involved the cars you see here and the re-positioning of the product (in Australia).

“So you will see Skoda volume increasing (thanks to the Rapid)… it has a specific role and it complements the company’s (portfolio).” Mr Irmer added that one of his key changes compared to the previous management was to sharpen his brand’s value proposition similar to the way Skoda has been operating successfully in Europe.

“The positioning with the way the cars are now is exactly the same way it has been in European markets,” he said.

“It gives us a glimpse of what the brand is capable of.” Although Skoda sales have been down 7.2 per cent year-on-year, Mr Irmer said it has been due to the lack of sufficient Fabia light car and Yeti compact SUV stock – with the latter’s shortfall partly due to being in changeover mode.

The real shining light before this week's Yeti Series II and Rapid Spaceback launch has been the new Octavia launched in December, which is up 12.0 per cent YTD.

Mr Irmer believes part of its success has to do with consumers responding to the add-on technology and options packages.

As a result, Skoda will increase its package availability with every new model launched.

“Up to 90 per cent of the Octavia Elegance buyers have chosen one of the packages,” Mr Irmer said.

“So we will continue to do the same – offer more packages and less individual options.” Last year saw only a modest 1.5 per cent increase in volume, from 3502 to 3555 units. Rival Renault, in contrast, enjoyed a 40 per cent sales uplift in 2013, hitting a record 7016 units.

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