Skoda in Singapore: Czech mate



Skoda officially returns to the Singapore car market today. Will it be fourth time lucky for the brand here?

SINGAPORE 

Write a smaller cheque for a Volkswagen with a Czech badge attached? That’s one way to look at Skoda’s business model, as the brand returns to the Singapore car market today with a four-model lineup.

Skoda, a carmaker from the Czech Republic, was acquired by Volkswagen in 2000. Its cars have borrowed heavily from VW for their technology since then, and now the brand is borrowing VW’s marketing clout: the Skoda Centre Singapore is being run by Volkswagen Group Singapore (VGS).

 

What’s a Skoda, exactly?

One easy way to think of the brand is as a sort of value-for-money label by VW. “At the core of the ŠKODA brand is its ‘Simply Clever’ philosophy, which means the simple sophistication of ingeniously designed cars,” says Ricky Tay, the managing director of VGS. “It has a deserved reputation for cars that offer excellent price-performance ratio, in terms of its design, quality and technologies.”

 

What’s the deal with the new dealership?

Skoda officially (and involuntarily) left Singapore in 2013, when motor entrepreneur Peter Kwee’s Harvest Automobiles was wound up. The brand shopped around for other dealers but never came to terms with one.

VGS took over the servicing of its cars in 2014, and will now operate the Skoda Centre at the Volkswagen building at 247, Alexandra Road.

Why is Skoda making a comeback?

VGS says that VW, as a group, tries to cater to all budgets and tastes. “A core part of the Volkswagen Group mission is to have a wide range of mobility options to meet the diverse needs and budget of today’s car buyers,” says Mr Tay.

Skoda’s return gives VGS the chance to sell “cars targeted at different value segments of the market,” he says.

 

Won’t Skoda’s cars just steal sales from Volkswagen itself?

Two ways to look at this: VGS might as well participate in Skoda’s comeback (instead of trying to fend it off if it had returned with a rival dealership), and being in charge of the brand’s destiny allows VGS to pick and choose the models that make the most sense for both brands.

The two brands can “work in tandem”, says Mr Tay. “For instance, we are bringing in the Kodiaq, which will be our group’s first seven-seater large SUV (Sport Utility Vehicle). The Kodiaq will complement the group’s SUV offensive. As such, we do not expect much overlap in the two brands, as both appeal to their respective target audiences.”

The Octavia, a mid-sized five-door liftback, is another car that could complement VW’s lineup. It might replace the Jetta, a car that has been discontinued but once accounted for more than a third of VW’s sales here.

 

Why should Skoda succeed now if it flamed out in the past?

In a word, clout. VGS may be the fourth party to try its luck with Skoda here, but it’s the largest and best-financed.

In another word, scale. VGS has a slimmer cost structure for the business — its Skoda workshop has been running for years, VW and Skoda can share a large number of spare parts inventory, the business has significant economies of scale in terms of management costs, and it doesn’t have to run a standalone showroom. All that will allow VGS to price Skoda’s cars strategically. Some Skoda models were more expensive here than their VW counterparts in the past, which directly undermined the brand’s very strategy.

It means something, too, that a business the size of VGS is now handling Skoda. It signals to car buyers that Skoda is not just here, but here to stay.

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Jon Lim
Jonathan Lim is CarBuyer's fourth historical Jonathan. He enjoys candlelit dinners, walks by the beach, ah who are we kidding - he likes classic cars, modern cars, cars that aren't even cars, and perhaps even a crossover or two.