Škoda Auto lost CZK 17 billion due to the termination of activities in Russia

Škoda Auto lost CZK 17 billion due to the termination of activities in Russia

Š koda Auto increased by CZK 17 billion due to termination of activities in Russia

Due to the termination of business activities and production in Russia, Škoda Auto lost almost 700 million euros last year, i.e. approximately 17 billion crowns.

Prague – Due to the termination of business activities and production in Russia, Škoda Auto Group lost almost 700 million euros last year, i.e. roughly 17 billion crowns. The automaker ended its activities on the Russian market after Russia's invasion of Ukraine and is currently negotiating their sale. Negotiations are in the final stage. The car company's operating profit decreased by 42 percent last year to 628 million euros, which is roughly 15 billion CZK. Profit after taxation fell by 53 percent to 415 million euros, i.e. about ten billion crowns. This was announced today by Škoda representatives at the annual press conference.

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According to Chairman of the Board Klaus Zellmer, the high loss in Russia was caused by the need to maintain the sales network and production plants there, even though the automaker no longer produced or sold cars. At the same time, he called the loss a one-time item, and since there is no chance of an early recovery of production and sales, he decided to sell the Russian assets. “Negotiations are in the final stage, but I cannot disclose the details until they are agreed upon by all parties involved,” he added.

Skoda in Russia produced at plants in Kaluga and Nizhny Novgorod. In 2021, Russia was the second largest market for the brand, to which it delivered 90,400 cars. Last year it was 18,300 cars.

In contrast to the operating profit, the car company's total sales increased by 18.5 percent to 21 billion euros, i.e. roughly 499 billion crowns. Profitability of sales remained positive and reached the level of three percent, but decreased by 3.1 percentage points. Car deliveries to customers decreased by 16.7 percent to 731,300 cars last year.

According to Zellmer, the market situation remained challenging due to persistent shortages of semiconductors, ongoing problems in supply chains and a substantial increase in raw material prices. “During probably the most challenging market conditions in the modern history of the company, Škoda Auto achieved a very solid financial result,” said Zellmer. Group This year, the company wants to produce and sell more cars than last year.

The biggest market last year was Germany, where the company delivered 134,300 cars, i.e. 1.8 percent less than in 2021. India grew the most, where sales increased by 128 percent to 51,900 cars. Western Europe remained the largest sales region with a decrease of 7.8 percent to 377,000 vehicles. In China, sales decreased by 37 percent to 44,600 cars.

Despite a drop of 30 percent to 141,100 cars, Octavia remained the best-selling model, followed by Kamiq and Kodiaq with 96,300 and 94,500 cars, respectively. The biggest increase is reported by the Indian Kushaq model with an increase of 110 percent to 26,800 cars and the electric Enyaq with a growth of one fifth to 53,700 cars.

Skoda's material investments last year increased by 48 percent to 1.16 billion euros, which is roughly 28 billion crowns in conversion. A significant part of the investments went into the modernization of factories and their optimization for the production of electrified cars. Investments in research and development increased by three percent to 852 million euros (20 billion crowns).

Skoda will present a new generation of the Superb and Kodiaq model lines later this year. Both cars will be available with a plug-in hybrid drivetrain, a first for the Kodiaq. The Superb will be produced together with the VW Passat in Bratislava. In addition, the automaker will introduce modernized versions of the Kamiq and Scala models as well as the Enyaq iV electric car, which will also receive the top-of-the-line Laurin&Klement version.

The company will continue to implement the Škoda Next Level Efficiency+ cost-saving program, which aims, among other things, to increase profitability to eight percent. By 2027, the Czech automaker has earmarked 5.6 billion euros (134.4 billion CZK) for the transformation towards electric mobility. In the same period, it will invest an additional 700 million euros (CZK 16.8 billion) in digitization and will continue to expand in new markets.

Škoda Auto will be responsible for the Southeast Asian region

Škoda Auto will take over the strategic management and future expansion of the large-volume brands of the Volkswagen parent concern – Škoda, Volkswagen and Seat in the Southeast Asia ASEAN region. In addition to Vietnam, it includes, for example, Cambodia, Laos, Singapore, Malaysia or the Philippines. He wants to achieve a market share of five percent. This was stated by company representatives at today's press conference. The automaker already has a similar role in the concern in India.

Škoda is currently just before entering the Vietnamese market. In the second quarter of this year, it will start selling the imported Karoq and Kodiaq models, and in 2024 it will start local assembly of cars. “The current estimate of the initial potential is 30,000 cars, but in general we believe that it is possible to achieve sales of 40,000 cars and possibly even more in the future,” said Martin Jahn, member of the board of directors for sales and marketing.

India, where Škoda currently manufactures the Slavia and Kushaq models, will become the Czech automaker's export center to neighboring countries. Škoda Auto is also strengthening its business activities in the Middle East, it has joined the sales company Audi Volkswagen Middle East and, using cooperation with production facilities in India, wants to increase sales in the region to 5,000 cars in the next three years.

“By taking over the strategic management of the group's high-volume brands in the ASEAN region, we are significantly expanding the global scope of the Škoda brand. This shift in responsibility demonstrates the Volkswagen Group's trust and belief in the expertise of the Škoda brand team. We have a clear plan and long-term vision for this region. Our goals are ambitious but achievable , we intend to secure a market share of more than five percent for the group's high-volume brands, and under our strategic management we want to use the potential of these significantly growing markets,” said Škoda's chairman of the board Klaus Zellmer.

According to Jahn, the association of ASEAN nations with annual growth by eight percent the fastest growing region in the world, with a projected sales of more than 4.1 million vehicles in 2030. “We believe that our model portfolio has significant opportunities in this region, and therefore we want to be present here and benefit from this development. Together together with our strong partners, we are building and further expanding local production capacity and sales network,” he added.

In the Czech Republic, the automaker wants to focus more on the introduction of electric drive. Last May, it started the production of battery systems for models on the MEB platform, and this year it will launch a second line that will increase the total capacity to 1,500 units per day.

Škoda employs 45,000 people worldwide. It currently offers customers the Fabia, Rapid, Scala, Octavia, Superb, Kamiq, Karoq, Kodiaq, Enyaq iV, Enyaq Coupé iV, Slavia and Kushaq model series.