Skoda refocuses efforts on budget models

SKODA Australia is looking to recentre its operations around being the entry-point to the VW Group portfolio, with new, more affordable offerings being added to the brand’s range.

The brand has drawn criticism in recent years with its ambitious positioning of some models, but with a new, more affordable entry-grade Fabia city car coming soon, as well as confirmation that the brand will continue to offer the more affordable versions of its Scala small car and Kamiq compact SUV, it appears that Skoda has listened.

But Michael Irmer, Skoda Australia managing director, said the brand was essentially backed into a corner over the past few years, with significant disruptions to supply chains seeing a pivot to offer more highly-specified cars at higher prices.

“The main driving force is, when we had to cope with shortages, it was severe. I mean, really severe. We had to reduce, we had to rationalise, and at the time, it also coincided that our demand situation supported that,” he said of the brand’s unique position in Australia, where Skoda customers typically opt for the more richly specified model grades.

“When we launched the Fabia, for instance, it was quite controversial back in the day,” he said of the then-$37,990 drive-away price for the sole Monte Carlo model grade

“And it is really working well for us, so (we’re) happy with it. It never was intended to do ultra-large figures, but it has exactly been able to deliver the figures which we had planned for, and … most of the time was really low supplied in the dealerships.

“So, that car has worked, and now it's time that we diversify, a bit later than we thought initially, we can bring a grade below this.

“This was the situation, but now the world around us has changed as well. The economic situation has changed, the supply shortage is gone, we can now equip the cars again the way we like it – we don't need to constantly work around shortages of certain equipment levels.

“And we also don’t have this totally unprecedented shortage of production output anymore. So this is all gone.” 

It is expected that the new Fabia entry-level version – which is described by Mr Irmer as the equivalent of a mid-spec, compared to what is offered in Europe – will also play in the low thirty-thousand-dollar drive-away range.

“Skoda was always a brand with value and, a little bit also, the entry into the VW Group's model portfolio. But in Australia, we’ve been experiencing … the brand has been able to establish itself differently based on what our mix of product was,” he added.

Mr Irmer referenced the rich mix of Octavia sales, with a defined skew towards the RS grade.

But the brand has now added a more affordable Sportline version of the Octavia for the same price as the entry-level Style ($42,490 drive-away for the lift back, $43,990 drive-away for the wagon), with a number of sporty design features and interior treatments, and lowered sports suspension too.

This was, it was stated, in direct response to customers looking for a sportier Octavia but not able or willing to spend up to almost $60K driveway for the RS version.

“The entry cars serve not necessarily a volume purpose,” he said.

“What they do serve though is a purpose that the customer is actually coming and looking closer.”

When the facelifted Kamiq and Scala models launch mid-2024 they will add equipment over the existing versions, and as such, the brand has warned that the pricing may step up from the current positioning.

The Kamiq Run-Out model has a price of $32,990 drive-away, making it the most affordable European SUV in the country, while the Scala Ambition base model starts at $33,990.

“I think there will be some changes, but we don’t intend large steps (up in price),” Mr Irmer told GoAuto.

“I think it’s done the brand well to have this mix of customers in it, and I don’t think we want to disappoint them…. Also, the Australian economy will not be going through a recovery anytime soon, that will take a little while.”

At the same time, Skoda is expected to bring the Enyaq and Enyaq RS models to market, possibly as the brand’s most expensive models to date in Australia. That vehicle has been delayed due to “platform release issues” for our market.

Mr Irmer further stated that there’s more to value than just the sticker price, reiterating that Skoda is the only European brand in Australia to offer a seven-year/unlimited-kilometre warranty, as well as the option to purchase a seven-year prepaid servicing pack.

In the meantime, the brand has just added a more affordable version of the Karoq midsize SUV at $39,990 drive-away, undercutting several big-name rivals but offering a turbo-petrol powertrain unlike many of them.

And further to that, there’s a new Run-Out version of the Kodiaq seven-seater SUV, too.

The Kodiaq SportLine Run-Out adds a number of high-end features such as Matrix LED headlights, 20-inch wheels, Alcantara interior trim and plenty more, in what Skoda describes as a “free $5000 upgrade over Kodiaq Style”, with a drive-away price of $56,490.

With updated and new models due later in 2024, the brand is currently running at a slower rate for sales compared to 2023.

To the end of February, Skoda had registered 1018 units in VFACTS data, compared with 1324 for the first two months of last year – a 23.1 percent drop.