According to recent quotes from Klaus Zellmer, CEO of Skoda, the automaker is considering leaving the Chinese market and will make a definitive decision in next year. “The Chinese market is extremely competitive, so we will discuss our options with our joint venture partners. Perhaps the corporation should keep selling automobiles in China rather than producing them there.”
The Skoda China branch responded by telling a reporter from 21st Century Business that as part of routine business operations, Skoda continually assesses its position in the global market and modifies its strategy to take into account the growth of local markets, including the Chinese market. In order to determine how to effectively position the Skoda brand in the Chinese market within the framework of China’s transition to a fully networked electric mobility, Skoda has been keeping ongoing and productive communication and exchanges with its partner in China, SAIC Volkswagen. On whether a strategy adjustment is necessary, at present no choice has been taken.
The official response states that Skoda is considering changing its future development strategy in China, however a final decision has not been made about its decision.In truth, Skoda’s sales volume has been falling annually, and the company’s market competitiveness has been diminishing in recent years.
As one of the Volkswagen Group’s volume brands, Skoda has benefited from the rapid expansion of the Chinese automobile market. For three years in a row, Skoda sold more than 300,000 cars in China from 2016 to 2018, with 341,000 of those sales occurring in 2018.
Skoda’s sales have, however, fallen down quickly since 2019, with yearly sales decreasing 17.3% to 282,000 cars in 2019 and then 38.7% to 173,000 cars in 2020. Only 71,200 automobiles were sold in 2021, a 58.8% decrease. Skoda sold 38,000 cars in the first month of this year, a 61.32% decrease from the same period last year. Skoda’s declining market share is what’s causing the decline in sales.
The price of the Volkswagen brand has increased recently, and this has put a twofold squeeze on Skoda’s market competitiveness, which has decreased quickly.
Additionally, Skoda build its new VISION 7S concept car in August of this year to show its commitment to the electric transition. The automobile is based on Volkswagen’s MEB platform. Skoda intends to release three new all-electric vehicles by 2026, including a small sedan, a small SUV, and a family SUV with seven seats.
Despite being one of the most aggressive global automakers, the Volkswagen brand ID. Series continues to receive the majority of attention. In addition, the ID. series, which benefits from the reputation of the VW brand, has not performed as well as anticipated in China, and the Skoda electric vehicle, which is also based on the MEB platform, may have a harder time winning over Chinese buyers.
The joint venture brands that used to be the “leader” in China’s automobile market for many years—from Changan Suzuki to Changan Peugeot Citroen, from Dongfeng Renault to FAW Mazda, from GAC Fique to GAC Acura, and now Skoda—are now at a crossroads, and the exit of marginal joint venture brands has gradually become the norm as a result of the rise of self-branded cars and the change in the competitive pattern of the country’s auto market.