Skoda, the Czech car maker historically not as well considered as many of its rivals, had better profit margins in 2017 than any of its siblings in the Volkswagen Group, other than Porsche. Surprising, huh?
Last year, it achieved profit margins of 9.7% – hugely better than Volkswagen’s 4.1% and Audi’s 7.8%, despite both of those brands selling more expensive models.
Not only is it showing up its VW Group siblings with profit margins, but it’s also one of the best profit margins in the entire industry.
There’s no doubt that Skoda deserves it success – operating profit was up 34.6% to €1.6bn – with good value yet excellently engineered and increasingly good-looking cars.
But there’s more at play here. Skoda has all the excellence of German engineering – thanks to being part of the VW Group since 1991 – but with many of the cheaper costs of being based, first and foremost, in Czech Republic, a traditionally weaker economy where manufacturing and people costs are considerably lower.