Twenty-three years ago, I made the trip to the pre-EU Czech Republic to see Skoda unveil its first all-new model under Volkswagen Group ownership.
The Mk4 Golf-based Octavia was crisply modern and wore an unapologetically big chromed grille. (Big chromed grilles were popular back then.) Skoda’s PR boss announced that the car would compete with Rover and Volvo.
To put that into the context of 1995, Skoda was the maker of VW-tweaked but decidedly old-school cars. Rover was on the up, having been bought by BMW the year before, and Volvo was admired for being solidly middle class and thoroughly practical. Back then, a chrome grille was a sign of ‘cut-above’ aspiration.
Fast forward to 2018 and Skoda has made the kind of progress that would have seemed beyond imagining. Rover is long dead, BMW pulling the investment plug in 2000. Volvo’s fortunes and sales wavered as it tried to become a true premium brand before it blew the budget on new engines and architectures and took off under Chinese ownership.
The new Volvo and new Skoda comparison is very interesting. Volvo sold 571,000 cars in 2017 and managed to make significant profits on them of around £1.2 billion. Skoda, by contrast, sold 1.2 million vehicles globally – and it doesn’t even have a presence in the US market.
Even more remarkably, despite selling more down-to-earth vehicles, Skoda’s operating profit was around £1.4bn in 2017. Skoda’s profit margin was 9.7% - the sort of figure usually associated with BMW and Mercedes.
In the first half of this year, Skoda’s sales rose 11.6% on the same period in 2017 to 652,700 units (or up 8% if you take out China’s enthusiasm for Skoda). This is partly thanks to the runaway success of the big Kodiaq SUV, which has hit 250,000 sales already. Sales of the big Superb are also said to be running well ahead of expectations.
Skoda sources say the brand’s factories are "maxed out" and work is under way at the main Czech facility to build a big new paint shop to get rid of the bottleneck.
The day before the Paris motor show opened, Skoda revealed another new model. The as-yet-unnamed compact hatch was presented as a ritzy Vision RS concept, but the underlying production car - due at the very end of the year - will be a direct rival for the Ford Focus and Vauxhall Astra, replacing the budget Rapid. Some say it is also intended to capture entry-level Golf buyers who are put off by the move upmarket of next year’s Mk8.