By on October 11, 2010

Skoda dealers in Europe are up in arms and openly protest plans by Volkswagen to strip Skoda cars to a point where they become unsalable, Automobilwoche [sub] says. Volkswagen denies any stripping. They wouldn’t do something as crude, at least not in public. They “derefine.”

When Volkswagen took a 31 percent share in Czech Skoda in the turbulent year of 1990, it was a step to get a foothold in the Eastern Block. The Eastern Block was already teetering, but was still intact, in a way. Skoda had a good name in the east, and a dealer network. So that was the plan.  When Volkswagen became 100 percent owner of Skoda in the year 2000, Hungary, the Czech Republic, and Poland had joined the NATO. It was clear that most of what used to be “Eastern Europe” and part of the now disintegrated Warsaw Pact, would become part of the EU, which it did. The EU now ends some 600 miles east of the Skoda works. Skoda needed a new raison d’être. Not very publicly, they were positioned as the low price entry brand of the Volkswagen empire. The trouble was, Volkswagen didn’t give them any low priced cars to sell, or any budget to develop some. They handed them the existing Volkswagen stable, Polo, Golf, Passat and said: “Don’t spend a lot of money and make the best of it.”

And that’s what the clever Czech engineers did. It quickly became known that a Skoda Superb was a better and yet cheaper Passat, that a Skoda Octavia was a better and yet cheaper Golf,  and that a Skoda Fabia was a better and yet cheaper Polo. Quickly, driving a Skoda became a sign of superb intellect: “Who do they think they are kidding? It’s a Volkswagen with more in it and with less out of my pocket.” Skoda became a success, the brand of the smart shopper.

That didn’t sit too well in Wolfsburg. In the beginning of the year, there were moves to put Skoda back in its box. Reinhard Jung, then chairman of Skoda, was being sent into retirement at the youthful age of 59 (gee, Piech is 73.) Jung was replaced by Winfried Vahland, formerly President of Volkswagen Group China, and known for executing the wishes of Wolfsburg without making waves. Having finally arrived, Vahland cleans house at Skoda.

Two weeks ago, Winterkorn said in Paris  that it “can’t possibly be that the Fabia has a higher-grade dashboard than the Polo.” Instead of inventing lower cost cars, Volkswagen invented a new word. The  “Entfeinerung” or  “derefinement.”  A new euphemism for the much harsher decontenting.

As a start, Skodas will be stripped of such superfluous details as the A/C or the spare wheel. Even the built-in umbrella that made the Superb famous will be sacrificed to the gods of the Entfeinerung. If you want it, you need to pay for it as an added extra. The sporty Fabia RS had its Xenon lights removed. Can’t even order it at extra charge.

While Vahland is executing Winterkorn’s Entfeinerung orders, the dealers rebell. Thomas Peckruhn, head of the Skoda dealer association said that “nobody should assume that this won’t be noticed by the customer.” Translation: If you rip the heart out of Skoda, you’ll feel it in sales. As far as taking business away from Volkswagen, Peckruhn has a different version: “We capture customers from the French brands, Peugeot, Renault, including Dacia. Volkswagen captures more customers from us than the other way round.”

Knowing Volkswagen, the protests will be for naught. Both Austria and Germany have a long history of treating the Czech Republic as a colony, and have experience in putting down insurrections.

Euphemisms such as the “Entfeinerung” also have a rich tradition at Volkswagen. A dealer cull  for instance was no dealer cull. It was a “Vertriebsnetzbereinigung” or “distribution network cleansing.” When the bug had to go, the strategic paper was titled “Die Grosse Entkäferung” , the big debugging. If you want to fire an exec, but decide to wait instead until he dies or retires, then this is called “die biologische Lösung,” the biological solution.

Makes you shudder sometimes.

PS: Last September, Skoda sold 75.790 cars, the best sales in a single month. In the first nine months, worldwide sales climbed 12.8 percent to 568,990 units. Anywhere else, this would be party-time. At Volkswagen, it’s reason for Entfeinerung.

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27 Comments on “Volkswagen’s Reprisals: The Derefinement Of Skoda Begins...”

  • avatar

    Well, they are busy “derefining” Volkswagens, so why is it a surprise that they would be doing the same to Skoda.

  • avatar

    VW has too many brands.  Now they are turning Skoda into another SEAT to protect Chevrolet, I mean the VW brand.
    Take a page from the golden years of General Motors in North America.  They flourished in the 1960’s when their individual brands had semi-autonomy and were led by people who understood each brand.  The rivalry between brands was good for GM.

    • 0 avatar
      Educator(of teachers)Dan

      Yes god forbid that VW use this to up their own game rather than cutting an in house “opponent” off at the knees.  I don’t believe I’d ever want to play on a team with VW.

  • avatar

    So Mr. Winterkorn expects people who don’t care about badges and brands (i.e. clever Skoda customers) to be loyal to the brand and “upgrade” to VW for a few grand. Someone needs to send him a few Hyundai brochures.

  • avatar

    Land of tribal warfare.

    I was always contemplating buying another VW or Audi, very likely the A3.
    I recently got my daughter the Tiguan but the irritating number of tiny little problems keep nibbling away at the over-all sturdy car.

    Now this stupid national arrogance. It’s their own company! Why not do what any good business would do and copy this new success throughout the business?
     This is what makes Mulally great at Ford and why his style is missed at Boeing.

    Success. Spread it around.
    What a concept!

    • 0 avatar

      Big Al has two big-picture things going on … reduce (badges, platforms, plants, dealers, etc.) and proliferate best practices through-out the global Ford organization.

      VW is doing anything but reducing.  (And they walk a brand positioning tight-rope because of it. It would be fascinating to see the VAG’s perceptual maps of model and brand positioning…)

  • avatar

    Too many car brands worldwide, period. Somehow, there has to be a shake-out, but when? The goverments are bankrupt, although they refuse to admit it. Maybe it’ll be very soon.

  • avatar

    I have a fetish for linguistic gymnastics intended to mask the true effect of an action you don’t want to have flagged, be that in “German oder English (I know how to count down…)”. “Entfeinerung” must rank close to the top of newspeak in this respect!

  • avatar

    “…cleansing” … “the biological solution”
    Shouldn’t Germans have learned to not use terms like that by now?

    • 0 avatar
      Dr Strangelove

      You don’t understand. Bertel is trying to show how un-German he is, by making dark insinuations about other Germans. Pathetic, of course.

    • 0 avatar

      This is really a little harsh and ignorant of the requirements of good writing.

      I think Bertel is American, regardless.

      And you can use historical references or culture to make a point.
      Especially when THAT very same historical and geographical area is part of the story.
      After all, using samurai or Greek mythology would not have been as effective.

    • 0 avatar
      Educator(of teachers)Dan

      Actually Bertel is as German as sauerbraten but I still think people are making much ado about nothing.

    • 0 avatar
      Dr Strangelove

      I am as German as Sauerbraten, too, and I can tell you that Bertel’s shtick is very common with Germans of his generation. They are wracked with feelings of guilt by association over history, even though they personally had no share in it.
      I can relate to this. My great uncle served time for his role as a doctor in a prison camp during WW2. Not very close to me maybe but it does give me pause, makes me wonder how I would have acted, had I been in his position …
      It is one thing to profess your own pure heart at every turn, as many modern Germans are fond of doing. Tiresome but harmless. However, to turn around and accuse everyone else of closet Nazidom is in my book pathetic, and that is putting it mildly.
      I guess this may just get me banned from TTAC – if so, I’m sure it will be in the spirit of true freedom of speech.

    • 0 avatar

      They are wracked with feelings of guilt by association over history, even though they personally had no share in it.

      Doc….Who the hell isn’t!?
      I am.
      After all, I am the reason the planet is warming, the ocean is dying and there are no more “native” Americans.
      Don’t talk about guilt to a former catholic nun raised/frightened boy.

      It’s a good thing single malt is a renewable resource.

  • avatar
    Dr Strangelove

    This post conveniently overlooks that Skoda has had trouble turning a profit lately – and that in spite of their lower cost of labour, and of having most of their development already done for them by the tyrants at VW.
    Of course the dealers are only concerned with their own profitability, and like the idea of selling cars with cracker values and reputable family relations. No surprise here.
    If VW were to hold steady and let Skoda increase sales regardless of profitability, just so they can meet their ambitious agenda 2018, TTAC would call out their hubris. If, on the other hand, they maintain profitability and take a hit in sales, they get criticized for dictatorial attitude. VW just can’t win, can they.
    But then on the other hand, so can’t GM. I guess that is TTAC’s idea of “fairness”.

  • avatar

    The problem with Skoda, which ultimately lead to the new CEO wasn’t only that it was getting too close to VW (though that certainly was the case and was the only angle the media likes to report). Skoda got that close to VW Quality by spending to much money. The Superb didn’t get magically made better than the Passat its based on by czechian magic, it got there by using material, including options as standard, doing clever, but ultimately also expensive technological show-offs (the superbs double trunk for example).
    And that showed in Skoda profits. They were high in 2008 (2009 is difficult as always), yes – but on a profit/car basis they were going downwards. Even though Skoda was selling more cars, and more expensive cars then earlier, and economies of scale should be working for them – the profit per car was going down. They simply made cars that were getting as expensive to built as a VW and then selling them for less. The critics and some buyers of course loved it… ;)
    The whole comparing VW to GM thing is something that americans seemingly love to do, though they keep ignoring some facts about it.
    In its heyday, GM in the US had Chevy, Cadillac, Saab, Saturn, Buick, GMC, Pontiac, Hummer all basically selling cars or trucks to non commercial customers. Plus the international brands (also: passenger vehicles) Opel, Holden, Daewoo and Vauxhall, and several equity stakes in Isuzu, Fiat, Suzuki and Subaru.
    VW isn’t close to that. 3 of the brands sell less than 5.000 cars a year, 1 (or 2, depending if you count MAN which you should not) built Heavy Trucks and Buses, and another one builts only Light Commercial Vehicles and is usually not recognized as its own brand anyway…
    With the exception of Seat (which basically serves as a not-too-succesful international brand for southern europe, which also gets sold elsewhere), the VW brands are positioned rather clearly: Skoda -> VW -> Audi -> Porsche. Growth rates of those four companies in the markets where they are all sold can actually show you, that it is working rather well. ;)

    Oh, also “cleansing” is a very unusual translation, used only to somehow invoke dark images of Nazis strolling through Prague. No dictionary I know uses that translation – Bereinigung in a business context would be translated as “Correction”, “Adjustment” or “Reassessment”. But that just sounds so much less dramatic now, doesn’t it? The “biological solution” is a rather famous euphemism all over the world, also used regarding Castro, so no VW-context there either. And Entfeinerung isn’t a new VW coined euphemism, but a completely normal german word, used very often in technical terms, which has been adopted more by car-fandom complaining about their cars, than by the companies itself.

  • avatar
    John Horner

    “Entfeinerung English translation: reduction in complexity”
    Hmmm, that doesn’t sound quite so sinister.

    • 0 avatar

      Sorry, but “reduction in complexity” translates to “Vereinfachung”
      “Entfeinerung” is the reverse of “Verfeinerung” – refinement.
      Just like “decontenting” is an euphemism for “less content”, “Entfeinerung” is an euphemism for “less refinement” – not for a reduction in complexity. A reduction in complexity might be a side-effect, but this is not what the word means.
      Herr  Doktor Fremdliebe: I worked for Volkswagen for 30 years. I give them props for having been first to own up to their Nazi past. I also fought a 30 year war against verbal abominations like “Wartungsintervallverlängerung” etc. It has nothing to do with guilt. I was born after the war and don’t feel the least bit guilty. However, someone with history should be aware of it.

  • avatar

    Sorry to quibble with your history lesson – but the Czech’s were ruled from Vienna for far longer than they were from Berlin.

  • avatar

    That’s a REALLY sharp wagon in the article picture. Wonder why I can’t buy something like that from Detroit? Wish I could buy that Skoda but then all we get are VWs – not the full lineup. The Detroit version would probably need to look really masculine and bulky. Like it was ready for Armageddon and all I need to do is ride the family around town.

  • avatar

    When I was in Ankara, Turkey this year I first saw Skoda’s, and it was obvious these were very nice cars. The full-size wagon in the picture was especially popular. If VW really wants to double North American sales, they could start by bringing Skoda’s over here as VW’s version of, say, Acura.

  • avatar

    Note to all: At TTAC, we rarely muck with the posts anymore. I never edit anything. If a post steps over the line, it gets deleted. (Anything that has racism in it pretty much automatically gets deleted.) If that happens to you, move on, no bad feelings. But argue with an admin decision, and the posting privileges are revoked, without warning, forever. As it happened now.
    Also, stuff like “I guess this may just get me banned from TTAC …” won’t prevent you from getting banned. Au contrair, your wish may just get fulfilled.

  • avatar

    That should be Eastern Bloc, not “Block.”

  • avatar

    Although I can understand why European customers and dealers are upset, this is good news. VW’s poor grasp of brand differentiation is one of its biggest weaknesses. They spent a lot of time buying their way to greatness but didn’t do any of the work necessary to actually differentiate the acquired brands (having it all figured out on paper doesn’t count).
    Skoda was always talked about as an entry level product but obviously isn’t. VW doesn’t need two mid level brands – one is enough and its Volkswagen. VW needs an entry level brand (Skoda) a mid level brand (VW) and an upscale brand (Audi). The Skoda products need to be brought down to their correct level of equipment and refinement for their price relative to their competition.
    I can excuse VW’s attempt at selling upmarket cars like the Phaeton because there may be a compelling business reason for them in the Chinese market. When it comes to Skoda, however, I can find no excuse for selling a mid level car at an entry level price. Good for VW on finally doing something about that.

  • avatar

    That car looks somewhat like the C-Class Estate.
    I think worrisome precedents are being set – rather than a constant strive to improve, things seem to be going the reverse direction – VW’s new cars for NA, now Skoda. I also wonder if the E-Class Convertible was designed with a cloth roof to lower the cost of putting a metal folding one too.
    Seems like a trend towards universal cheapness

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