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Last time we took a look at one of the most disastrous examples of the latest history of automotive branding. Now, we will take a look at very successful one, a company called Skoda, car manufacturer from my home country, the Czech Republic.
In the US, you probably haven’t seen a Skoda before or even haven’t heard of it. They are not officially distributed here and technically they cannot be even driven in the country since they have not completed the required crash tests and other important paperwork (although they would be more than fine).
Over the past 25 years, Skoda experienced a rise like no one else in the business…
Over the past 25 years, Skoda experienced a rise in the business which no other similar automotive company encountered. From a post-communist rejected joke brand it has become a respectable player on the market in the high-quality VW concern. (well, VW’s reputation in the States has been very bad over the past few months but still, in Europe, it is one of the most successful companies – people just do not care about the Dieselgate that much – since about a half drives diesel cars…)
When the Iron Curtain fell, Skoda cars were considered as a joke in the West…
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Skoda is the third oldest European automotive company, after Mercedes-Benz and Peugeot. In the 1920’s and 1930’s, Czechoslovak cars like Skoda or Tatra, were considered as one of the best innovative cars made in the world. Unfortunately, WW2 and recent arrival of communism stopped the fruitful era and cars became worse and worse. When the Iron Curtain fell, the typical Eastern sales markets were gone and all the export companies had to face new challenges in the West. Competing against well-established companies for a not-a-long-ago centrally planned manufacturer was a difficult task: cars (for example Favorit 136 in the picture above) were considered to be a joke and people just did not want to buy them. Skoda was about to bankrupt.
However, the Czechoslovak sinking ship was attractive for many foreign investors. Cheap labor force, decades of automotive experience and strategic position in the center of Europe were the strengths of this investment. Skoda had two major bids from known big foreign car companies – French Renault and German Volkswagen.
Renault wanted to use existing facilities for building their small cars – in other words, suppress or even erase the Skoda brand. Volkswagen however, wanted to keep the Czech brand and just use the investment for improvement of the quality and subsequently the image of the company. No surprise that in 1991, the western neighbors of the Czechs, Germans, won the contest.
Volkswagen’s new branding “Skoda-Volkswagen Group” helped to change the old company image
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First years were not impressive, the new models were just optical improvements of the old ones and still, the brand image was kept in mind as “unreliable”. That’s why Volkswagen used branding – SKODA – Volkswagen Group. So suddenly, it was not an Eastern-European joke anymore – it was co-produced by perfectionist Germans. Not only that they saved a tradition of car manufacturing in the country, but also attracted many other automotive companies to the Czech Republic, such as Hyundai, Citroën or Toyota. Now, automotive industry in the Czech Republic is the most important one of the entire economy with the second largest production per capita in the world (after the Slovaks – brothers, with whom the Czechs shared one country for over 7 decades)
At the turn of the millennium, Skoda had three models to offer, all built on the high-quality VW platform, but different characteristics – focused on the inner space and clever flexibility of interior. That is when they used their slogan – SIMPLY CLEVER. And the sales went up – for many people, VW cars were just too cold and too “German”, Skoda cars used new interesting colors and innovative design – a lot of people saw a soul in the car. And now, some Skoda models are even more popular than their VW brothers.
Would Skoda’s enter to the US market help the declining popularity of VW products?
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After the recent scandal with the diesel engines, VW’s brand perception has noticeably decreased in the US. It would not be a bad idea of the VW managers to consider selling Skoda cars in the US too, especially the new SUV model (above) which is coming up next year. It would be a completely blank sheet of brand image with hardly any VW connection and overall, European cars have a good reputation. Furthermore, Skoda is a very successful brand in Asia, especially China and India, and premium models of VW concern such as Porsche or Audi, has already established a name in the country. So after entering American market, VW concern would still keep their sales high and also used another their brand for a lucrative market.
Have you heard about Skoda before? What do you think, should VW consider expanding this brand overseas to the US?
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