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 / Fall 2005 / Issue 40(originally published by Booz & Company)


Skoda Leaps to Market

The Ikea approach will be tested with the launch of the Roomster model in 2006. Like other Skoda models, it is targeted between two traditional class sizes, in this case between a station wagon and a minivan. “It’s something the young will want to buy,” says Mr. Wittig.

The freedom Volkswagen gives Skoda on design issues is significant. Mr. Wittig is passionate about research and development. Why else, he says, would Skoda bother to build an “innovation campus” for 1,300 designers and engineers next to its main plant? “We can’t develop everything in a car,” says Mr. Wittig, “but we will continue to develop in Mladá Boleslav [the features that make] a Skoda original. That means electronics and design features.” The company has built a Skoda university (offering degrees to prospective and present workers in business and technical disciplines) to “make sure our workers receive a Skoda education as well as a state one,” says Mr. Wittig. Skoda spent $210 million on research and development in 2004.

Skoda’s leaders have tied their fortunes to their faith that enough of a middle class will emerge around the world to be able to afford their cars. That may have seemed like a risky bet in the 1990s, but now it looks certain to pay off. To win over those customers, Skoda uses the same marketing weapon that Volkswagen itself used when it first launched the Beetle in the United States. That weapon is humor. Television slots had Skoda poking fun at itself and pitching the car as the choice of the underdog. “That helped establish us,” says Winfried Vahland, Skoda’s finance chief and vice chairman. “Now we need to concentrate on emotional efforts to enhance the brand.” In other words, future advertising campaigns will focus on the driver, not on the car.

Ice hockey, the Czech national sport, has been the other consistent feature in Skoda’s marketing campaign. “Ice hockey has the qualities of speed, precision, and teamwork Skoda wishes to be associated with,” says Mr. Kulhanek, who also presides over the Czech ice hockey association. Skoda now dominates corporate sponsorship of European ice hockey. Václav Havel joked that he couldn’t tell the Czech team from the American team at the 2004 World Championships, held in Prague. “It looked like Skoda versus Skoda to me,” he said at the time. The wisecrack did not endear the retired Czech president to Mr. Kulhanek, who scolded him for a lack of loyalty to the national corporate flagship. Yet many Czechs laughed along with Mr. Havel. That in itself showed how much things had changed. There was no inferiority complex; Skoda was successful enough to take a joke — and no longer in danger of becoming one.

Reprint No. 05306

Author Profile:

Jonathan Ledgard ([email protected]) is a foreign correspondent for The Economist and a contributor to The Atlantic Monthly. He writes about politics, war, and environmental issues. His profile of Danish “new optimist” Bjorn Lomborg appeared in the Spring 2005 issue of s+b.
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  1. Alfred D. Chandler Jr. and Bruce Mazlish, Leviathans: Multinational Corporations and the New Global History (Cambridge University Press, 2005): The global rise of multinational corporations, cowritten by Harvard’s eminent historian.
  2. Graeme Maxton and John Wormald, Time for a Model Change: Re-engineering the Global Automotive Industry (Cambridge University Press, 2004): A definitive overview of the changing global context.
  3. Dennis Pamlin, editor, Sustainability at the Speed of Light (World Wildlife Fund, 2002): Online book contains a powerful chapter on leapfrogging for environmental sustainability. Click here.
  4. Dave Randle, The True Story of Skoda (Sutton, 2002): Illustrated chronicle of Skoda’s history from its 1895 origins to the Octavia.
  5. Horacio Rozanski, Allen Baum, and Bradley Wolfsen, “Brand Zealots: Realizing the Full Value of Emotional Brand Loyalty,” s+b, Fourth Quarter 1999: How Volkswagen originally “leaped to market” with its Beetle. Click here.
  6. Skoda’s Web site: Includes financials, automotive history, sports sponsorship, and current models. Click here.
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