Management & Strategy

Serious business

Škoda continues to defy all detractors, turning around its perception as the butt of the joke to being a manufacturer of attractive, excellently engineered vehicles, and enjoying significant global success as a result.

Any business person will tell you that one of the hardest things to turn around is negative customer perception. If you fail to impress and this becomes accepted knowledge, then chances are you’ll never fully recover.

But then there’s Škoda.

Along with Russian car company Lada, the Czech brand was for a long time the butt of everyone’s jokes about poorly constructed and unreliable vehicles. However, while Lada recently stopped production of its most-recognisable Riva model, Škoda has transformed beyond all recognition.

Catherine Sleigh, Head of Press at Škoda, explains the basis for the brand’s tenacity. “Škoda is one of the world’s oldest automobile manufacturers, dating back to 1895. Our history is full of adventure, difficulty and success.

“After World War II, the socialist government held back Škoda’s technical development, as access to Western advances was restricted. The stagnation of the Czech economy reached new heights in the 1970s, meaning Škoda production only grew again when the Favorit model launched in 1987.”

Yet it was the merger with Volkswagen Group in 1991 which really drove Škoda to new heights. In just two decades, the company has changed from a state-owned Eastern European manufacturer selling two budget products and 170,000 units a year worldwide, to a global automotive player with seven distinctive and award-winning model lines produced from state-of-the-art manufacturing facilities.

What about the all-important customer perception? “Škoda UK made a conscious decision to confront consumer prejudice head on in the early 2000s,” says Sleigh. “It used groundbreaking marketing activities to support the company’s commitment to engineering and the quality of the vehicles being produced.”

This strategy worked. “It has been a period of outstanding business success,” emphasises Sleigh. “Škoda UK sales have increased from 29,000 in 2000 to 45,000 in 2011. Throughout 2012, sales have set new records each month, with market share just under 3%. Worldwide, Škoda sold 879,000 cars in 2011, another record for us.”

Škoda is also breaking its own records in terms of global reach. “We are realising a growth strategy that will see the brand sell more than 1.5 million cars worldwide by 2018. Over the coming years Škoda will launch a new model every six months.”

China, in particular, has been important for Škoda’s overseas development and is now the company’s biggest market, where it sold 220,000 units last year. The aim is for this figure to rise to 500,000 by 2016, accounting for 40% of total production.

“We will continue to build cars that deliver core values of great engineering, beautiful design and outstanding value for money,” concludes Sleigh. “We make cars built for real people to use in their daily lives.”

With such an admirable aim bringing the company success after success, it’s safe to say that Škoda is enjoying the last laugh.


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John Carroll - Helping businesses achieve International success. Head of Product Management & International Business, Santander UK