Not so long ago, in the London Sunday Times, Jeremy Clarkson chose his 10 ‘stinkers’ – the worst cars sold in the UK. With his tongue even more firmly in his cheek than usual, he described the Seat Leon as ‘a nondescript waste of metal’ and the Skoda Superb as having ‘the same amount of soul as a fridge freezer’.
Sunday Times readers and former colleagues (of which I am one) are used to Jeremy writing for effect, rather than providing rational information, and his blind prejudice against certain brands was revealed in the introduction to the same article. This was a paean of praise for the Volkswagen Golf, as the absolute best car for a family, a student, a boy-racer, or a technophile: “The Golf is to the world of cars what Number 42 is to The Hitchhiker’s Guide to the Galaxy.”
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Of course, the world’s most celebrated motoring journalist knows very well that, technically and mechanically, the Leon and the Superb are the same as the Golf. The MQB (Modularer Querbaukasten) ‘toolkit’ now provides the basic structure and building blocks for all but the smallest and largest cars in the Volkswagen Group. What separates Seat and Skoda from VW is reputation and presentation: styling and marketing.
Perhaps it as well for the Volkswagen Group that these brands are seen differently by car buyers because if Seat and Skoda ceased to exist, VW Group certainly would not sell another 1.5m cars a year. And right now, with the VW brand facing a continuing onslaught from government agencies, consumer groups, and dealers following ‘dieselgate’, it is the ideal opportunity to give an extra push to the associate brands that, somewhat surprisingly, have emerged from the scandal unscathed.
A senior Volkswagen executive, now departed, told me that an early decision was taken to let the VW brand take the hit on the diesel emissions issue. So it has been a quiet year for VW, with the new Tiguan its only significant launch – and that has been over-shadowed by the publicity for equivalent models from Seat and Skoda.
Seat used the Ateca, its first SUV crossover, to introduce its new chief executive Luca de Meo, who arrived as the Spanish company announced its first profit – EUR6m – in seven years (the different accounting arrangements in the VW Group recorded Seat as losing EUR10m but agreed that the result was a 92% improvement on the previous year).
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By GlobalDataDe Meo, who transferred from Audi after a meteoric but ultimately troubled career at Fiat, sees Ateca as a big opportunity for Seat: “SUV/crossovers are what people are buying right now and they sell at a premium compared with traditional body styles – the margin is double that of conventional cars.”
Seat has long been the Volkswagen Group’s problem child. Its Martorell factory near Barcelona is the third biggest plant in the Group outside China and for years was operating well below capacity. In 2010 it was decided to allocate Audi Q3 production to Martorell, which, with a modest increase in Seat sales, brought output near to its 500,000 optimum in 2015.
In an ironic twist, the Q3 is leaving Martorell just as the similarly-sized Seat SUV appears. The master plan now calls for Q3 production to move to Audi’s plant in Hungary and for the new model A1 to be made in Spain alongside the next-generation Seat Ibiza. There will be a crossover version of that (referred to as the ‘AO Cross’) but there is no room for the Ateca, which is being supplied by Skoda in the Czech Republic.
At 4.2m, Ateca is smaller than the VW Tiguan, while Skoda’s new SUV crossover, the 4.7m Kodiaq, is the same degree bigger – and the only one of the three to offer seven seats. The thinking here was that the larger car was more appropriate for Skoda, as it already offered the Yeti, a smaller SUV, which is not due to replacement until 2018 (and will be made alongside the Ateca). Sometime later there will also be a Seat equivalent of the Kodiaq, which, logically, would be built alongside it in the Czech Republic.
All of which draws attention to the close links within the Volkswagen Group and the unspoken competition between its two ‘budget’ brands in the marketplace. Marketing is kept completely separate and the brands are never compared with each other in publicity, even if both identify the same external rivals. In fact, there is quite a lot of cross-shopping, not only between similarly-priced Seats and Skodas but also with more expensive VWs.
A distinct identity and character is the essence of any brand. Skoda has established itself as a maker of dependable value-for-money cars that provide greater than average space. Seat is still struggling to find a special place. De Meo describes it thus: “a Southern brand; colourful, emotional, sporty and affordable.”
Both are using their SUVs to demonstrate a new and distinctive house style, proudly developed by their own designers, Alejandro Mesonero at Seat and Josef Kaban at Skoda. A sharpness of line and intricacy of detail sets them apart from other models in their ranges but there is slightly uncomfortable resemblance between the Ateca and Kodiaq (and also the Tiguan), which, despite their different sizes, are the same under the skin.
They do, however, have different roles. The Seat Ateca is a direct rival for the Nissan Qashqai, while the Kodiaq is effectively the joint flagship of the Skoda range, with the Superb saloon and estate.
Skoda is the more mature and more successful brand. Several things set it apart from other ‘generalist’ car makers. Its best-selling model is not the cheapest mini-car but the mid-sized Octavia. The biggest car, the Superb, outsells the Ford Mondeo and Opel/Vauxhall Insignia and the most popular version is only one level below the top-trim Laurin & Klement. Some 20% of Octavia sales are of the sporty vRS models. It is fair to suggest that the image of Skoda, under Volkswagen management, as a maker of dull-but-worthy cars, is out-of-date. It has really come up in the world.
Skoda is twice the size of Seat and still growing. It has a wider reach than the Spanish company with significant sales (and production) in China, India and Russia. Visitors to India are surprised to learn that Skoda is regarded as a premium brand; it preceded the VW brand and arrived without any of the baggage (and jokes) associated with the Communist-era cars.
Skoda reached its 1m annual sales target in 2014 and volume increased by a further 1.8% last year. In 2015, its revenue increased by 6.2% and the operating profit was EUR915m, a useful contribution to the beleaguered Volkswagen Group.
Skoda also has a new boss, Bernhard Maier, previously sales chief at Porsche. On 1 September, unveiling the Kodiaq at an elaborate launch event in Berlin, Maier told the audience of 700: “We have put all our talent into this vehicle, which represents our new SUV strategy running to 2025. The range will be expanded to include plug-in hybrid and electric models which we are now working on at full speed.”
Clearly, Kodiaq is an important car for Skoda. Its first full-size SUV, fully furnished with all the latest equipment, is expected to sell at least as well as the similarly-priced Superb, which suggests 100,000 a year in Europe. Sales will begin the March 2017, with an opening price in the UK around GBP23,000.
In the UK, Skoda has a 3% market share (about 80,000 cars this year). Duncan Movassaghi, UK brand director, sees Kodiaq as a change point in perception of the brand: “I don’t want to claim that we are a premium brand but we have premium quality now and our audience already includes as many buyers moving from premium cars as from the generalists.”
Kodiaq and Ateca have come at just the right time for Volkswagen’s ‘shadow’ companies. And while the parent brand is keeping its head down, Seat and Skoda have been encouraged to take maximum advantage of having the newest SUVs and crossovers and offering Volkswagen quality and technology at a lower price.
But I don’t suppose Jeremy will take any notice…
Ray Hutton
Footnote on the Kodiaq model name
In case you are wondering about the origin of the name, it claims association with the brown bears found on Kodiak Island, Alaska, but the spelling has been changed, we are told, to reflect the dialect of the local people. It is more likely that Skoda had to steer round previous usage – for many years, Kodiak was the name of GM’s middleweight truck range in the US. Skoda does not sell cars in America.
