VW Brand Seeks Competition Shields from Skoda Sibling

Volkswagen AG’s VW brand is trying to eliminate what it considers unfair competitive advantages from the group’s own Skoda brand, Reuters reports.

Sources say VW management and labor alike are grumbling that Skoda is stealing sales by combining VW technology with the Czech brand’s lower labor costs. Last year Skoda’s profit margin zoomed to 8.7% compared with a skimpy 1.8% margin for the VW brand.

Reuters notes that Skoda models such as the Kodiaq crossover vehicle and Superb sedan also have outscored their more expensive VW counterparts, the Tiguan and Passat, in recent quality surveys.

Skoda’s models ride on the MQB platform developed by VW. Reuters says the VW unit wants Skoda to pay more for sharing the technology. The news service notes that Skoda also benefits from manufacturing wages in the Czech Republic that are roughly one-quarter as much as in Germany.

Separately, VW brand chief Herbert Diess is pushing VW Group to create a larger gap in market position between the two brands. Reuters says Diess is especially keen to establish more differentiation between electrified models marketed by the two units.