What impact does the situation at Volkswagen have on Škoda Auto?
The situation at VW is now very serious, since the war it is the worst situation in the last 80 years. One of the reasons is electromobility. We have taken good steps from an ecological point of view, electromobility is a good path. We wanted to be in front, but we were left alone. Europe remained conservative and did not support e-mobility as promised. The elections, Ukraine were dealt with, but not necessarily China’s pressure.
Is a tariff on cars from China the solution?
The question of customs is problematic, for example France is for it, Germany is against it. We, in turn, did the smart thing and didn’t vote one way or the other. It could be deadly for China to take countermeasures on the tariff.
Photo: Odbory Kovo
Jaroslav Povšík, chairman of the trade union at Škoda Auto
China’s pressure is crucial because it has many car manufacturers. We taught them that, we wanted to make money there, but they became independent and now it is pouring into Europe in a big way. Now it’s a problem for all car companies here.
We have to continue with electromobility because the fines for emissions are terrible.
Is production interrupted in the Czech plants as well?
Lines are being shut down at Hyundai and other car manufacturers, we are also doing them continuously (according to the weekly Škodovácký odborář, some night shifts are being canceled at the Mladá Boleslav plant, editor’s note), we are mixing car production. We try to do it as best we can, we improvise a lot, but the suppliers are not able to adapt to fluctuations, for example they leave older technologies and cannot come back and react quickly.
Isn’t all this reason for a return to internal combustion engines and a retreat from such a rapid push for electric cars?
We have to continue with electromobility because the fines for emissions are terrible. They are completely draconian. They were first 50 euros per gram of CO2, now they are set at 92 euros for next year 2025. Support must therefore also be sought. It does not look like the EU has deviated from the strategy. We can continue on this path, but we won’t make money, and if it doesn’t, the company has to close. Perhaps one could look for a reduction in emissions, but that is probably not the way to go. Customers want different cars. They want a big SUV like the Kodiaq, there’s a lot of weight, a lot of drag, it has to have a strong engine. People don’t want small weak cars.
Now, according to the strategy, the new Elroq model will be launched, the price has been reduced to a minimum (according to the Škoda Auto configurator, the price starts at 799 thousand crowns, editor’s note), it is the same platform as the Enyaq, only a slightly shorter car. You can’t afford the same price here, if it catches on, it will be at the expense of Enyaq, the question is whether it is cannibalism.
VW in Germany is threatening to close some factories, is there a threat here as well, or is it possible that Germany would withdraw some production from us?
Firing a German is terribly expensive. They could demand that we transfer part of the production to them out of solidarity, but it would be counterproductive to close us down, we have progressive models. In the past, for example, the Citigo moved to the VW plant in Bratislava, then it was discontinued. Now Superb is being made there and it’s not a hit parade either. VW can drag us down.
Photo: Radek Plavecký, Novinky
Car production at the Škoda Auto plant in Kvasiny. Illustration photo
Are layoffs at risk in Czech plants?
There are no layoffs here, it is handled through the agency staff. We have a cushion of 2,900 external workers here who have secondment contracts. At the moment, people are not recruited from outside at all, employees move within the company and leave through natural turnover.
Photo: Radek Plavecký, Novinky
Union boss at Škoda Auto at one of the strikes in Mladá Boleslav
What is the way out of this situation?
This is a crisis like thunder. The European Union should withdraw draconian emissions fines. Inputs for the production of an electric car are terribly expensive, and those who drive the electric wave lose money on it – and the only money they make is that there are no fines for electric cars. At the same time, there is no support, nor support for networks and charging points. On the contrary, for example, Prague wants to give the same parking conditions to electric and internal combustion cars.
We would welcome not having to pay such emission fines, to remove the 2035 limit for the internal combustion engine ban, so that models can be mixed.
Škoda sales are growing in Western Europe, falling to the bottom in Asia
Economic
What on Earth is Happening with Volkswagen and Škoda Auto? Buckle Up!
So, buckle up, because we’re diving headfirst into the whirlwind that is the current state of Volkswagen and its brand of wizardry, Škoda Auto. It’s like watching a slow-motion car crash – you can’t help but stare. The chairman of the trade union at Škoda Auto, Jaroslav Povšík, has articulated quite the predicament. We’re talking about the worst crisis for VW since… well, let’s just say a couple of world wars ago. I mean, if the last 80 years of history could speak, it would probably scream, “What are you doing, Volkswagen?!”
Electromobility: The Right Path? Or Just a Wrong Turn?
Now, let’s address the elephant in the room—electromobility. It’s been a bit of a hot potato, and as Mr. Povšík pointed out, Škoda initially wanted to be the trailblazer, but instead, they ended up doing the "electro-wait." Europe promised support for e-mobility, but it seems to have fallen into a black hole somewhere between the elections and the “let’s deal with Ukraine” agenda.
It’s a bit like arriving at a party only to find that no one else has brought snacks, and the punch bowl is dry. You’re in the right place; you’re just not having a good time. So, is a tariff on cars from China the magical wand we need to wave? The answer seems to be split down the middle like a group of friends trying to decide which Netflix series to binge-watch. France is all for it, while Germany is firmly against. And Škoda? They’re in the diplomatic limbo, not wanting to provoke the dragon that is China by throwing tariffs at it. Talk about walking on eggshells!
Production Woes? Just a Bit of Light Improv!
Then we have production issues. It’s a bit like a game of musical chairs, but when the music stops, nobody is left sitting—just standing around awkwardly, desperately trying to improvise. Shutting down night shifts and mixing car production? Sounds like an episode of "Whose Line Is It Anyway?" where the “lines” are actually assembly lines, and the game is who can keep the car wheels turning without losing their marbles!
And of course, the magnificent fines for emissions are just around the corner. Hefty! We’re talking about €92 per gram of CO2. I know individuals who can rattle off their investments, stocks, and retirement funds faster than I can say, “Where’s my emission fine?”
Internal Combustion Engines: The ‘Throwback Thursday’ of Cars?
Now, let’s dig into whether we should revert to internal combustion engines or continue this brave new world of EVs. Mr. Povšík says there’s no backing down from this push for electrification because, quite frankly, the financial penalties are more terrifying than my aunt’s fruitcake at Christmas. The customers, however, want their SUVs, and they want them big and powerful—kind of like how everyone feels after gorging on holiday spreads.
The Elroq model’s entry with a minimum price tag feels a bit like putting out a new cocktail at a bar that’s already overrun with drinks nobody wants. Is it simply meal prep for the wristwatch-cannibalizing Enyaq? Will we have a situation where everyone suddenly wants the Elroq, leaving the Enyaq sulking alone in the corner?
Threats Looming: The German Tug-of-War
And then there’s the looming threat of factories shutting down. VW could potentially play a sinister game of “transfer the production,” which sounds like a bad episode of a reality TV show. Imagine the outcry on social media! There’s a catch, of course; firing a German worker is as costly as that last-minute flight during the holiday season—read: very expensive, do not attempt at home!
The Layoff Woes: A Cushioned Landing?
Now, onto the juicy stuff—layoffs. Thankfully, it sounds like they’ve got a bit of a cushy landing with the agency staff, so it’s less “Survivor: Automotive Edition” and more “soft landing with agency workers.” But is that enough to keep this mighty ship afloat?
Navigating the Storm: What’s Next?
Ultimately, the question lies in navigating an out-and-out storm that’s brewing like a bad cup of tea. Mr. Povšík argues for the EU to toss those draconian emission fines out the window like yesterday’s lunch. And let’s be honest, the transition to EVs is costly, and without any support for this buzzy new world, those making the electric leap might find themselves financially swimming with sharks without a lifeboat.
So here we are—Škoda is in a bind, Volkswagen is teetering like a drunk at a bar, and Europe is trying to figure out how to play nice with its neighbors while simultaneously grappling with this electric revolution. Will they find a way out? Only time will tell, my friends! And remember: the road ahead may not be paved with golden electric chargers, but let’s hope it’s not filled with potholes either! Cheers!
The current situation at Volkswagen is extraordinarily dire, marking the most challenging landscape the company has faced in eight decades, particularly exacerbated by geopolitical tensions such as the ongoing war. Among the myriad factors shaping this crisis, the shift toward electromobility stands out. While we initiated meaningful strides towards ecological sustainability, our ambition to lead the charge in this new automotive frontier has been undermined by a lack of external support. Europe has remained entrenched in conservatism, failing to uphold its commitments to promoting e-mobility. Political distractions, such as elections and the war in Ukraine, have taken precedence over addressing pressures stemming from China.
The question of tariffs on vehicles imported from China remains contentious; countries like France are in favor, while Germany stands opposed. Our strategy has been to remain neutral, refraining from taking a definitive stance on this complex issue. However, it’s crucial to recognize that imposing tariffs could elicit severe retaliatory measures from China, which may profoundly impact the automotive landscape.
China’s influence cannot be overstated, given its vast array of automobile manufacturers. We facilitated their growth by engaging in profitable ventures, only to watch them evolve into formidable competitors that are now flooding the European market. This influx presents significant challenges for all manufacturers operating within Europe.
Lines are being shut down at Hyundai and other car manufacturers, including our operations. Reports indicate that night shifts are being canceled at the Mladá Boleslav plant, reflecting a need to mix car production more strategically amid fluctuating demand. We aim to navigate these disruptions as effectively as possible, adapting to fast-changing conditions, yet supplier challenges persist, particularly as many have been slow to modernize their technology.
We have to continue with electromobility because the fines for emissions are terrible. The penalties for exceeding emission thresholds are exceptionally severe, having escalated from 50 euros per gram of CO2 to a staggering 92 euros by 2025. It appears the EU remains steadfast in its regulatory framework, leaving us no choice but to pursue this path. Financial viability hangs in the balance, as failure to adapt could force the company to cease operations altogether.
Now, according to the strategy, the new Elroq model will be launched, the price has been reduced to a minimum. This vehicle, set to debut at a starting price of 799,000 crowns, shares its platform with the Enyaq but is a slightly shorter variant. There is concern that if the Elroq gains traction, it may cannibalize sales of the Enyaq, raising questions about market competition within our own model lineup.
Firing a German is terribly expensive. While discussions have suggested that Germany might request the relocation of part of our production as an act of solidarity, closing our operations would be counterproductive, as we have innovative models that are crucial to our identity. In the past, the Citigo’s production was shifted to a VW plant in Bratislava and subsequently discontinued, while other models, like the Superb, have not yielded strong sales figures. The interdependencies with VW could threaten our operational stability.
There are no layoffs here, it is handled through the agency staff. Presently, we maintain a balance with a cushion of 2,900 external workers employed on secondment contracts. Currently, there is no external recruitment taking place; instead, we are managing workforce transitions internally, relying on the natural turnover of personnel.
This is a crisis like thunder. To navigate this upheaval, the European Union must reconsider its stringent emissions penalties. The costs associated with producing electric vehicles are exorbitantly high, which is further compounded by the lack of supportive measures for manufacturers. Those invested in the electric transition find themselves financially strained, as their only current relief comes from avoiding emissions fines. Moreover, issues persist regarding the inadequate infrastructure for charging stations, highlighting a broader systemic failure. Remarkably, cities like Prague are disincentivizing the transition by grouping electric and internal combustion vehicles under identical parking regulations.
We would welcome not having to pay such emission fines, to remove the 2035 limit for the internal combustion engine ban, so that models can be mixed.
Škoda sales are growing in Western Europe, falling to the bottom in Asia
Economic diplomacy, any layoffs in Germany would be met with significant resistance and financial repercussions. The unwritten rules of the workforce here make it exceedingly difficult to let go of employees, and doing so would not only hurt morale but also generate backlash from unions and the public. Consequently, we find ourselves in a delicate situation, having to balance operational needs with the obligations we have toward our workforce.
As we reflect on the state of the automotive industry, it becomes clear that we are at a crossroads. The push towards electrification is imperative, yet it’s fraught with hurdles that are challenging our very foundation. Failure to navigate this transition effectively could jeopardize not just Volkswagen as a company but also reshape the entire automotive landscape in Europe. It’s a complex dance of innovation, regulatory pressures, and market realities; all while trying to maintain a united front against external challenges, particularly from competitors and the geopolitical landscape.
Looking ahead, we cannot afford to shy away from the realities that face us. Embracing change, leveraging new technologies, and perhaps most importantly, securing supportive policies from regulators will be vital if we want to ensure that Škoda, Volkswagen, and the broader industry can thrive in this rapidly evolving environment. For now, we must stay the course, remain resilient, and cleverly adapt to the many changes that are looming on the horizon. The automotive world has always been about evolution; let’s ensure we evolve wisely.
