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Skoda entering the US market? Not so fast, says VW, part 1

Ever since the Diesel scandal broke in the US, there have been rumors that Skoda could step up to enter the North American market to pick up the lost share or even to replace the tarnished VW brand altogether in this market. Kriss even wrote an article explaining in 5 points why it would make sense for Skoda to enter the US market 18 months ago, before the emission cheating software had been revealed. In the poll at the end of that article, 63% of our respondents thought VW should base its US offerings on Skoda models. This week, the influential auto journalist and well-informed industry watcher Georg Kacher quotes a senior VW board member: “We may be crazy, but we’re not mad. Entering this huge market with an unknown brand, a model range focused on Europe, and a non-existent dealer network is pure suicide. Furthermore, the last thing Volkswagen of America needs now is in-house cannibalization.”

The irony in this quote lies in the part “a model range focused on Europe”, because that’s exactly what Volkswagen itself has been unsuccessfully attempting to to for decades.

Sure, a few years ago they developed a US-specific Passat and tweaked the US-spec Jetta to better fit American tastes, but those still didn’t connect with what North Americans are looking for in a car. Even the desperately needed, long-awaited all-new Atlas 3-row crossover, designed specifically for the US market, is already facing criticism for its bland exterior and interior design, which shows Volkswagen may have listened to its dealers on the kind of product they need, but their execution still proves a disconnect with American tastes. So in which way would Skoda be a worse choice than VW itself?

Adding a sixth point to Kriss’ plea: I don’t think Skoda really offers in-house cannibalization to VW. For one: it needs to be positioned right, and for that there are two options. The first option is to market Skoda similarly to Europe: as a value-for-money brand positioned below the upper-mainstream Volkswagen. As Kriss pointed out, Americans love value for money and Skoda could appeal to that in a great way, with cars that are slightly larger than their competition, but at a similar or even lower price. The problem with that strategy is that VW has already been trying for years if not decades to establish itself as a upper-mainstream/near-premium player in the US and has failed in every possible way. Which brings me to the 2nd option: position Skoda above Volkswagen and market it as an upper-mainstream brand. It works in China and it used to work in India before VW’s pride took over and they destroyed the brand in that market because they couldn’t stand the “disgrace” of having Skoda considered in higher regard than their namesake brand. Skoda’s design isn’t much more exciting than VW’s, but at least the Superb and the new Kodiaq crossover look more sophisticated than their Volkswagen counterparts, which help to give the brand a bit more cachet. Volkswagen can then be positioned as the value-for-money brand it used to be in the original Beetle era.

Moreover, Skoda would’t be associated with things like the emission cheating scandal and the lack of reliability of early 2000’s Volkswagen products. I’m sure Volkswagen still has some brand credit among some US consumers and there will still be a ton of VW fans with feelings of nostalgia to their grandma’s Beetle or their dad’s Jetta Sportwagon that ran on used cooking oil, but for each one of those there are also a handful of people for whom the Volkswagen brand is tarnished with scandals and bad reputation and who’d never even consider the brand as a viable alternative to their Ford, Chevrolet or Toyota. But those people wouldn’t have the same strong feelings against Skoda, simply because it would start with a clean sheet. And I know that’s not an easy position to start from, but it also offers an opportunity to start over again. And with the Octavia, Superb, Kodiaq and other upcoming crossovers, Skoda’s line-up will be more suited for the US market than VW’s has ever been.

So let’s see if the rest of the board agrees with this unnamed board member, and if they’re willing to set aside their pride to position their namesake brand below a brand that used to be the laughing stock for its communist-era design and socialist build quality.


Also read why I think VW shouldn’t bring Skoda to the US, but instead should consider an entirely different approach.