Volkswagen Targets Share Growth for Skoda in Spain

MADRID – Volkswagen is looking to increase market penetration for its Skoda marque here in 2015, targeting levels closer to what the Czech brand has achieved elsewhere in Europe.

Skoda controlled a 2.2% share of Spanish new-vehicle sales in 2014, less than half the level it holds in the key European markets of Germany and the U.K., where penetration hovers around 5%.

Volkswagen-Audi Spain (VAESA) CEO Francisco J. Perez says there is no reason Skoda can’t achieve a similar market share in Spain in the long term.

“We have a growth plan for Skoda, always maintaining the profitability of the brand and that of its dealer network,” Perez says, without detailing the automaker’s strategy for growth. “We want to reach 3% share for Skoda before 2018. But we are not going to stay in that 3% (range).”

It is clear new models will serve as major pillars of the plan. Last year, Skoda revealed the third generation of its Fabia range, and the third-gen Superb lineup is being unveiled to the media this week ahead of its Geneva auto show debut. Both models will be introduced this year in Spain.

Perez admits the plans for Skoda in Spain will turn the brand into a bigger competitor with VW-owned – and separately managed – SEAT. The new Fabia, which is smaller than the Superb, will serve as the battering ram in Skoda’s attack. Skoda sold 67,894 vehicles in Spain during 2014, up 15% from the prior year.

As a whole, VAESA registered 142,000 vehicle deliveries in Spain last year, including 8,500 light-commercial vehicles (mainly Volkswagen Caddy), 20,000 more than in 2013. That equates to a combined 15.5% share that Perez wants to maintain in 2015.

Perez says VAESA’s network of 176 Volkswagen, Audi and Skoda dealers averaged a 1% profit margin in 2014, and he expects that to improve to 2% this year.

“Our dealers’ profitability should be in the 2%-3% range in good times, but I want to underline that VAESA dealers have not lost money during the crisis, despite 2 million vehicle sales were lost in Spain during that period,” he says.

Perez forecasts industry passenger-vehicle sales this year at about 1 million units, up from 865,000 in 2014, assuming the Spanish government maintains subsidies. He says it is important for those subsidies to remain in place until the market reaches sustained sales of 1.2 million units per year.

“However, I think the Spanish automotive sector needs a structural support plan, better than the current and abrupt succession of subsidies plans every three or four months, with the market going faster than the Spanish regulators,” Perez says in clear reference to the current seventh edition of the PIVE Plan that already has seen its funds exhausted before officially taking eff