At an event to announce the brand’s future last June, Thomas Schäfer, CEO, Skoda Auto, summarised the company’s overall focus in the coming years: “What will our company look like in 2030? In one sentence, he said, “We are making Skoda even more international, electrified and digital.”
And to achieve this, he said, the brand will be focusing on three top priorities: Expand, Explore and Engage. The recent announcement making Skoda responsible for developing its existing MQB-A0 Global platform is a strategy for both VW and Skoda brands and gels well for the latter with its recently declared three priorities.
The MQB-A0 Global Platform is used worldwide, and it is the foundation for new models with combustion engines in the entry-level segments. It will be used by the group brands Skoda and VW to develop new entry-level models for regions with high growth potential, including India, Russia, Africa, as well as the ASEAN countries and Latin America.
Interestingly, the Czech carmaker is taking responsibility for a global platform for the first time, immediately following its specially adapted MQB-A0-IN platform for the Indian market.
What Will Skoda Do?
Despite the unfavourable situation, the brand that celebrated 125 years of existence last year delivered over a million cars. The year 2020 was the seventh consecutive year it achieved that feat, strengthening its position as one of the leading brands in the volume segment. With the new entrusted responsibility, the brand now intends to leverage its high level of development expertise, ability to coordinate complex Group projects and experience in entry-level segments to implement it in individual regions. Besides, the brand is creating an important prerequisite for becoming the leading European carmaker in the growth markets of India, Russia and North Africa over the long term as part of its Next Leven - Sokda Strategy 2030.
Entry-level Segments
Giving a new obligation, the VW group banks on Skoda Auto’s high level of development expertise and years of experience in the price-sensitive entry-level segments, especially in a few markets like India, Russia and North Africa.
As per India 2.0 project Skoda team has been developing the MQB A0 platform further with an initial focus on India. Accordingly, technical development will mainly be carried out in India. One of the significant aspects of the project is that Skoda and Volkswagen are pursuing the future plan for India in concert, in which both brands will benefit from it.
It may be recalled that last June, the group’s plant in India began the series production of the Kushaq, which is the first series model based on the MQB-A0-IN version. It is also the modular transverse toolkit that Skoda has specially adapted for the Indian market.
The platform will also be used for other Volkswagen and Skoda models. In the medium term, the group also plans to offer the Kushaq in other emerging markets. The second model is already in the starting blocks and will be unveiled later this year.
Through its comprehensive platform strategy, the brand can achieve economies of scale, which will enable it to offer its customers worldwide state-of-the-art technology and high quality at competitive prices.
Sourcing
Achieving economies of scale through increased volumes will also pave the way for looking at several optimising options, including commonality of parts, which will help the brand leverage on standardisation, not only in sourcing systems and modules but also in after-sales service and creating an effective aftermarket value chain. These elements will certainly give huge opportunities for the parts suppliers, especially from countries like India, which is touted to be a destination for quality and cost-competitive parts.
Challenges
To execute the obligation, Skoda may face several challenges, and the prime being the people. The brand will require highly qualified employees for the MQB-A0 Global Platform, especially in technical development. While some will transfer to the project from other positions, the majority will be newly recruited. However, with the drop in production across OEMs worldwide, the supply of talented workforce will be more than the demand now, and this can become manna for Skoda.
Johannes Neft, Board Member for Technical Development, Skoda Auto, states that the brand’s development team has a deep understanding of the entry-level segments. “We are now bringing this to bear with the development of the MQB-A0 Global Platform. For us, this is a great award and at the same time strong motivation to make the project a success. Based on this platform, new models will be created that are precisely tailored to the diverse customer needs in the various regions.”
Ralf Brandstätter, Chairman of the Board of Management at Volkswagen, says, “This way, we are creating synergies that will further increase profitability within the volume group.”
Schafer says, “We are applying our development expertise, taking on even more responsibility within the Volkswagen Group and at the same time strengthening Skoda Auto’s headquarters as an important European development centre for the group. I am convinced that we will be able to win over many new customers thanks to the MQB-A0 Global Platform and bolster the group’s position in the entry-level segments.”
Conclusion
At the end of the day, Skoda is ideally positioned to assume worldwide responsibility for the successful further development of the MQB-A0 Global Platform within the Volkswagen Group. This is primarily due to its expertise in entry-level mobility and price-sensitive markets. Based on this, the group’s volume brands – Volkswagen and Skoda – will be enabled to quickly deliver products to customers that are unique in the volume segment.