Škoda Auto challenged by Hyundai for Czech new car sales

The Czech Republic’s biggest manufacturer and exporter Škoda Auto is witnessing worrying developments on its home market as it sees its domestic market share diminish and an aggressive grab for buyers by its biggest local rival, Hyundai.

Photo: Škoda Auto

Ten years ago around half the new cars sold on the Czech market bore the Škoda Auto badge. Last year the proportion fell to less than one in three In all honesty, no one believed that the top Czech manufacturer, which accounted for over 7.0% of total Czech exports in 2012, would be able to hang onto the levels of domestic market dominance of a decade ago. And, as worldwide sales have taken off, the importance of the Czech market for Škoda Auto has slipped significantly. Czechs account for around 5% of Škoda’s total global sales.

Even so, Škoda Auto is unlikely to relish the latest figures for domestic sales or the manner with which South Korean based Hyundai has pushed itself into second place on the local market, and is challenging for an even bigger slice of sales.

The latest figures for 2013 show Škoda Auto sold just under 50,000 cars to Czechs. That was around 7% down on its 2012 figure and worse than the across the board 5% slump in Czech car sales last year. Th company’s worldwide sales are down by 2.6% according to the latest, incomplete, statistics for last year.

Hyundai, which has its own manufacturing plant as well in the Czech Republic at a site not far from Ostrava, has raced from almost nowhere to become the country’s second placed seller of new cars.

Twelve years ago Hyundai claimed just 1.0% of Czech car sales. Last year it beat Volkswagen into second place with over 16,000 cars sold. It was the only one of the five biggest local retailers to see significant growth. Hyundai models now occupy first, second, or third places in all the Czech model categories where it present.

Photo: CTK

Hyundai boasts its credentials as a Czech manufacturer, it has a plant not far from Ostrava which now accounts for around a quarter of local car production. While Hyundai is an undoubted upstart compared with the more than 100 year tradition of Škoda Auto, it has been keen to position itself in Czech minds as a local company. It is one of the biggest sponsors of the Czech national football team and visitors to Prague’s main airport are welcomed with billboards to ‘Hyundai country.’ Hyundai is now reckoned by advertising experts to be significantly outspending Škoda Auto on its local sales campaigns.

The battle for market share has also become a lot sharper. Last year, for example, some Hyundai dealers took the surprising step of showing off Škoda cars in their own showrooms so that they could point out the extras on their own models. This was seen as a breach of the unwritten rule that producers should talk up their own cars but not rubbish their rivals. Škoda Auto has hit back with research which it says proves that Hyundai cars have higher long term service and repair costs than their own models. There are few signs that the competition will cool down this year. The only plus might be that the Czech new car market is expected to pick up again and there will be more potential buyers for the two manufacturers to fight over.