Volkswagen's Acquisition of Skoda Auto: A Central European Success Story

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Case Details:

Case Code : BSTR262
Case Length : 24 Pages
Period : 1991-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Volkswagen AG, Skoda Auto Industry : Automobile
Countries : Czech Republic

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Production and Quality Improvement

After several decades as a state-owned company, Skoda's production methods had become outdated, and the company had no well-defined quality management systems...

New Product Development

The rationalization of production processes at Skoda was taking place even as new and improved models under the Skoda brand were being launched...


The launch of new and better quality cars was supported by an extensive image-building exercise across Europe, and especially in the UK, where Skoda had been the subject of many jokes over the years (Some samples: "What do you call a Skoda convertible? A dumpster."32; "How do you double the value of a Skoda? Fill it with gas."33).

Long-time Skoda employees found the jokes annoying.

"What you have to remember is that we made the best cars we could under real socialism...

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Skoda in the New Millennium

In late 1999, the government of the Czech Republic announced that it was ready to divest its remaining 30 percent stake in Skoda...

The Road Ahead

As of 2006, Skoda was a well established mass market car brand. Analysts said that the main reason behind Skoda's success was the fact that in most markets, Skoda had the support of the VW brand. Customers reasoned that that they were buying a VW car for a lot less (especially as the Skoda cars shared many components with VW).

It also helped that Skoda had been able to overcome its quality issues and had built a reputation for good value cars. Skoda's future plans included developing a leisure vehicle featuring advanced technology...


Exhibit I: Skoda - Vehicle Production by Model
Exhibit II: Skoda - Consolidated Profit and Loss Account (CZK Millions)
Exhibit III: Indicative Prices of Skoda Cars as of Mid 2007
Exhibit IV: The Three Basic Values of the Skoda Brand

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32]  William Underhill, "How Many Germans Does It Take to Make a Czech Car?"Newsweek International, September, 2001. 

33], (Accessed on June 4, 2007).


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