Volkswagen Group Australia (VGA) managing director John White has admitted the company’s decision to move Volkswagen pricing down in recent years has put pressure on sister brand Skoda, and confirmed that the situation will be addressed.
White, however, also explained that the challenge now was to move Skoda further downward in the market, rather than alter Volkswagen’s positioning in this market.
“I acknowledge that any downward movement on the pricing and positioning of Volkswagen will put the squeeze on Skoda,” began the local boss (below).
“I think that the challenge is to move Skoda rather than Volkswagen.
“It’s something I need to look at for the next generation of models, and to take a model-by-model look at it.”
Those next-generation models include the next-generation Skoda Octavia, due in November, followed by the Skoda Rapid Spaceback (below) mid next year.
Asked directly whether the Octavia, in particular, could be priced lower than the outgoing generation, White reponded that “there’s opportunities” to do that, while declining to devulge further.
A Volkswagen international representative has, however, confirmed that there are aggressive plans in place to reposition Skoda as a direct competitor to the Korean manufacturers such as Kia and Hyundai.
According to the insider, the Rapid Spaceback will be “almost certainly” be priced at $19,990 driveaway or below, leaving space between it and the similarly-sized Volkswagen Golf which currently retails at $22,990 driveaway.
It is also likely the back-flip decision not to introduce the Rapid sedan to our market is to allow the new Octavia room to breathe as a sub-$25,000 medium-sized car. By VGA’s own admission, the Octavia will continue to offer the same ‘more space for less’ proposition as the Superb does, the latter example of which was given by VGA general manager communications Karl Gehling.
White admits that when he was appointed VGA managing director in April this year there was already a “repositioning proposal” in place for Skoda.
Although Skoda pricing will be pulled down further, standard equipment levels aren’t expected to remain high, with the local boss arguing that buyers of the Czech brand have different expectations to that of Volkswagen.
“A Skoda customer wants something European … but doesn’t necessarily want all of the same level of equipment as a Volkswagen,” White argues.
“So that gives you some levers on how to do it [repositioning].
“You don’t necessarily have to spec your Skoda like you spec your Volkswagen. Some customers would just look at the base RRP without getting into detail.”
White also cited that Skoda is far more “aggressive” than Volkswagen in terms of their tactical campaigns.
He did, however, admit that separating Skoda from Volkswagen remains a challenge at the lower end of the market, where VGA’s decision to import the Volkswagen Up but not its identical-twin the Skoda Citigo (above) – which the local boss is sticking by – means that local buyers can ultimately get into a Volkswagen for less than a Skoda.
One size up, and with the entry-level Polo currently retailing at $15,990 driveaway, it also leaves little room for the Skoda light hatchback equivalent, the Fabia, to move.
“There’s no doubt that as you come down the model range to something like Polo you’ve only got some room to manoeuvre; you’ve got more with Golf, more with Jetta, you’ve got more as you move up the range,” White added.
Skoda sales are down 12.3 per cent to September this year, with a 2671 unit tally beaten by 2000 units by a resurgent Renault, for example, which is up 37.2 per cent. This is despite Skoda, which returned to Australia in 2007, almost equalling Renault sales in 2011, 3501 to 3622. Skoda recorded just one extra sale in 2012 than it did in 2011, with 3502 units shifted, but is forecast to fall by around 370 units based on year-to-date trends.
Still, White says he is committed to retaining Skoda in Australia and hoping to get the repositioning plan underway with Rapid and Octavia. To the first six months of 2013, Skoda still sold 769 more cars than Opel, which was pulled from the Australian market shortly after…
