Skoda Auto Produces Cars Less Than Actual Demand

Mobility Outlook Bureau
16 Mar 2023
07:04 PM
2 Min Read

The current balance between demand and supply is not right for Skoda Auto; therefore, the carmaker aims to cut down the waiting time on its vehicles.

Skoda Auto

Skoda Auto produces cars less than the actual demand as it creates a stable residual value of the cars, thus having positive side effects, Klaus Zellmer, CEO, Skoda Auto, has said. 

At the 2023 annual press conference, Zellmer said that the current balance between the demand and supply is not right for Skoda Auto and that the carmaker aims to cut down the waiting time on its vehicles.

The Russia-Ukraine war has affected the entirety of the planet. Although the effect is felt globally, Europe is the worst hit due to the ongoing war. At the war's outset, many European brands, including Skoda Auto, decided to stop their operations in Russia. The negative impacts related to the business in Russia were estimated at almost €700 million for Skoda Auto.

He noted that the company is in its final talks to sell its Kaluga plant to a third party soon. This will create a sizeable gap in the company’s output. To eliminate the loss, the company plans to maximise the capacity at its existing plants, Zellmer said while answering Mobility Outlook.

On the other hand, the carmaker also plans to start its operations in Vietnam by May 2023, which will become the gateway for the company to enter the ASEAN region, the CEO noted. This is where India will emerge as the brand's export hub.

The plan is to export components for the Kushaq and the Slavia by the end of this calendar, while the CKD production for the vehicle in Vietnam is scheduled for 2024. Zellmer stated that India will act as an export hub for the company for its operations in ASEAN and the Middle East region.

Notably, the India 2.0 project vehicles have done the magic for the brand in India. Of the 51,900 Skoda units sold in India, which is 127.7% more than the 2021 figures, around 99.9% of the sales were from the Kushaq and the Slavia.

Interestingly, apart from India, the company has seen a downfall in every other region it operated, with Central Europe dropping by 9.8% YoY, Western Europe by 7.8% YoY and Eastern Europe by 11.9% YoY.

In 2022, The Škoda Auto Group delivered 731,300 vehicles worldwide, which is 16.7% down compared to 2021; however, its YoY revenues increased by 18.5% to € 21 billion.

The company noted that the market environment remained challenging due to the ongoing semiconductor shortage, persisting supply chain issues and a substantial increase in raw material prices. 

Christian Schenk, Board Member for Finance and IT, Škoda Auto, noted that the company managed to increase its sales revenue by almost 20% year-on-year despite comparatively low sales figures. The market is currently heavily distorted, and the extraordinary effects of the situation regarding Russia.

'We effectively counter-steered primarily with improvements in pricing, sales mix, and reinforcing the business in India,' he said. Schenk stated that between 2022 and 2027, the company will invest significantly in electric mobility and comprehensively digitalise its vehicles throughout the entire user journey, including safety functions and connectivity. To achieve sound financial results and an ambitious return on sales target of more than 8% from 2025, the company has implemented the Next Level Efficiency+ Programme from 2022.

In terms of EVs, Skoda Auto will add three more models to its lineup by 2026, while the India growth story will see the addition of both EVs and ICE till 2040.

Also Read: 

Skoda VW Ends 2022 On Record High Sales

Skoda Commences Kushaq Exports From India

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