Events that rocked the car world: When VW bought into Skoda, CAR+ December 2015

Published: 14 November 2015

► December 1990, VW buys into Skoda
► In 1991, Skoda sold 172,000 cars
► In 2014, that figure was 1.04m

It seems hard to credit, but there must now be young drivers who’ve never heard a Skoda joke. To them, a Skoda with twin tailpipes is surely a vRS, not a wheelbarrow, while the concept of a heated rear window being fitted as a hand-warming device because buyers were so often required to push will be baffling: now the marque regularly tops owner satisfaction surveys. Yet such was the state of Skoda’s art 25 years ago when, on 9 December 1990, the Czech state chose Volkswagen to help privatise and modernise the firm.

Following the collapse of Communism in 1989 and the rapid onset of a market economy in its wake, the authorities soon realised Skoda wasn’t strong enough to stand on its own. The homegrown car maker was drowning in debt (2.5 billion Czech crowns) accrued putting the Favorit into production to replace the rear-engined 100-series, and was still struggling with quality control that had already made it the laughing stock of the industry.

BMW and GM were among those interested in taking Skoda on, but in the end it was between VW and Renault. The Germans got the nod after pledging to invest a remarkable 9bn Deutschmarks and work to improve the Favorit rather than immediately replace it; indeed, it formed the basis of the Felicia in 1994, and it wasn’t until the 1996 Octavia that the first ‘new’ VW-Skoda arrived.

As with the takeover of Seat, Volkswagen AG chairman Carl Hahn masterminded the Skoda deal. The attraction was a cheap, trained workforce building a viable low-cost car that would give VW an entry-point into emerging Eastern Europe economies. There were teething troubles – the Germans made job cuts the Czechs found hard to swallow after decades of guaranteed employment – but today Skoda’s hard-won reputation for no-nonsense value makes the wisdom of the move seem clear.

Back in 1991, when VW formerly acquired its initial 31% stake for DM300m, Skoda sold 172,000 cars; in 2014 it sold 1.04m, a rise of 12.7% on 2013 and 1.4% of the entire global market. Sales revenue increased 13.9% to €11.8bn while operating profit shot up 56.5% to €817m. No one’s laughing now.

By CJ Hubbard

Former CAR magazine associate editor, road tester, organiser, extremely variable average wheel count

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