The Škoda Auto Group1) delivered 731,300 vehicles worldwide in 2022 and increased its revenues year-on-year by 18.5% to 21 billion euros(2021: 17.7 billion euros). The market environment remained challenging due to the ongoing semiconductor shortage, persisting supply chain issues and a substantial increase in raw material prices. Thanks to effective countermeasures, the car manufacturer managed to achieve a positive operating profit amounting to 628 million euros (2021: 1.083 billion euros; -42%). This was attained despite the financial burden of extraordinary effects regarding the situation in Russia. The negative impacts related to the business in Russia were estimated at almost 700 million euros. Therefore, the return on sales without these extraordinary effects slightly exceeded last year’s 6.1%, but dropped to 3.0% including extraordinary effects. Despite the current challenges, Škoda continues to be financially sound, pushing the internationaliziation of the company and keeps investing heavily into electromobility and digitalization.
The ASEAN region offers promising growth opportunities; the overall economy is growing by 8% annually. The automotive market is projected to encompass more than 4.1 million vehicles in 2030. The strategic advantages include geographical diversification of production activities, synergies with other regions where Škoda is active and free-trade agreements encouraging product localisation. In addition, the car manufacturer will be drawing on its considerable experience in the Indian market to strengthen its position in the competitive market.
Škoda anticipates significant sales potential in ASEAN and will contribute its expertise in the price-sensitive entry-level segments – competitive A0 vehicles under 20,000 euros. Saloons and SUVs, in particular, have major potential in these markets. With an estimated electrification rate of around 30% by the beginning of the next decade, the future in the market also lies with electric-drive vehicles.
Škoda Auto considers Vietnam the strategic gateway to ASEAN and the broader Indo-Pacific region. In cooperation with Thanh Cong Motor Vietnam (TC Motor) as the local partner for production and sales, Škoda Auto will gradually start importing the Kodiaq and Karoq this year, followed by the Superb and Octavia series from Europe in 2024. Local production of the Kushaq and Slavia from India from CKD format will commence in 2024 in Quang Ninh Province. The electric Enyaq iV family will round off the offering on the Vietnamese market from 2025 onwards.
Taking into account Škoda Auto’s responsibility for the global development of the MQB‐A0 platform within the Volkswagen Group, Vietnam represents an important customer base for Škoda products based on this platform.
Škoda Auto is projecting a rapid expansion of the dealer network to more than 50 partners and an annual sales potential of 30,000 units initially, increasing to over 40,000 units from 2030.
Vietnam has considerable growth potential in terms of gross domestic product and unit sales, its automotive market is extremely dynamic; there are currently only 34 vehicles per 1,000 inhabitants – with a population of around 100 million people. Nonetheless, Vietnam is already the fourth-largest automotive market in Southeast Asia.
With the gradual removal of customs duties on goods due to the EVFTA (EU – Vietnam Free Trade Agreement), Škoda is anticipating a strong increase in the sale of vehicles manufactured in the Czech Republic and imported into Vietnam.
India is a key market in Škoda Auto’s internationalisation plans. Under the India 2.0 project, the Czech car manufacturer has been responsible for the Group’s activities on the subcontinent since 2019. The locally developed and produced India 2.0 models – the Kushaq and Slavia – have been very well received by Indian customers. The brand more than doubled its deliveries there in 2022 (128% over 2021). This made the highly dynamic market the carmaker’s third largest individual market in 2022.
Škoda Auto has a long-term plan and a clearly defined strategy for developing the Indian market further. One crucial aspect is localisation: A localisation rate of 95% ensures maximum market proximity. The Group’s investments in the region amount to one billion euros to date, of which 250 million euros flowed into research and development projects in India. Most of the technical development is carried out locally. In the long term, Škoda is targeting a combined market share of five per cent with the Volkswagen brand, depending on market and segment developments.
The company is advancing the India 2.0 project by exporting vehicles from India, thus gradually transforming India into an export hub. The Czech car manufacturer began exporting the Kushaq to the Gulf States in October 2022. This makes the Middle East the first export region for the brand’s made-in-India model.
The brand is expanding its business in the Middle East, anticipating rapid growth in the region. To this end, the company joined the National Sales Company Audi Volkswagen Middle East (AVME) based in Dubai on 1 February. As the Czech car manufacturer’s first Managing Director in the region, Lukáš Honzák will be facilitating Škoda’s integration into the National Sales Company for the Audi and Volkswagen brands. Honzák is an accomplished sales professional and has many years of international experience in the areas of sales, marketing and developing the sales network.
The existing sales structure of AVME, which is represented throughout the Middle East, opens up additional growth opportunities. Škoda is currently active in four countries on the Arabian Peninsula: Bahrain, Kuwait, Qatar and the United Arab Emirates.
In the Middle East, Škoda Auto offers a wide variety of its European ICE models. Last year, the brand delivered a total of 1,200 vehicles to customers in the region. Through its expansion initiative, the company aims to reach 5,000 deliveries a year. The Kushaq is expected to account for more than half of future sales. Looking ahead, Škoda also intends to offer electric vehicles in the Middle East.
Škoda’s comprehensive corporate and production strategy also incentivizes dealers in the region to push ahead with their sales activities. Considering the expected increases in sales, they are investing heavily in their showrooms. Dubai is currently home to one of the brand’s largest dealerships in the world. Additional showrooms are planned for Kuwait and Abu Dhabi in the near future.