Case Study

Turbocharging growth at Skoda Auto

26 pages
July 2005
Reference: IMD-3-1549

With Skoda Auto winning many prestigious awards in the European car industry, it became a threat to established players. And a real success story from Eastern Europe. By 2004, the company from the Czech Republic reached a record export level of 86%. The cars were sold in 85 countries and at the same time, Skoda Auto wired a dividend of €96 million to its parent company, Volkswagen AG.For Detlef Wittig, who took over as CEO of Skoda Auto in late 2004, the challenge was to put Skoda Auto onto a growth path. The company announced plans to increase sales from 450,000 in 2004 to 600,000 by 2008 and eventually to 1 million units by 2015. This was equivalent to a growth rate of 12% p.a. This was an ambitious goal by any measure. For Wittig, the question was how to prepare the company for this rapid growth. Should he develop low-cost models for developing countries? How should he react to competitors setting up new production facilities in the Czech Republic? The environment proved to be hostile with overcapacity leading to price rebates in Europe. The case puts the readers in the situation of Mr. Wittig. After becoming a successful player in Europe, he had to manage the expansion overseas while defending market share in existing markets.

Keywords
Accelerating Growth, Expansion, Growth, Industry Structure, Internationalization, Transformation, Automotive
Settings
Czech Republic
Skoda Auto, Automotive, Automotive, Automobiles
2005
Type
Field Research
Copyright
© 2005
Available Languages
English
Related material
Teaching note
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