Skoda Auto sees slump in sales due to coronavirus

Foto: Archiv Škoda Auto

The car industry has been hit hard by the coronavirus crisis as lockdowns halted production lines and closed showrooms. Skoda Auto, one of the driving forces of the Czech economy, saw a 33 percent drop in sales in the first half of this year.

In the first half of this year, the operating profits of Skoda Auto fell by almost 75 percent to 228 million euros (approximately 6 billion crowns) down from 824 million euros a year ago. The data was released on Thursday by Skoda’s parent company Volkswagen.

Skoda’s revenues in the first half of the year fell by more than a quarter to 7.5 billion euros (196.5 billion crowns) from 10.2 billion a year ago.

Bernhard Maier,  photo: Alexander Migl,  CC BY-SA 4.0

According to the data, Skoda sold 372,000 cars in the first half of this year. This represents a year-on-year decrease of 33.6 percent. The Kodiaq and Karoq sport utility vehicles and the new Scala and Kamiq were the best-selling models.

The economic uncertainty surrounding the coronavirus crisis severely lowered demand which, together with the six- week-long coronavirus lock-down restricted manufacturing activities in all of Skoda’s plants. The company resumed production at its plants in Mladá Boleslav, Kvasiny and Vrchlabí at the end of April.

Earlier this month Skoda Auto announced that the Chairman of the Board of Directors, Bernhard Maier, is leaving his post prematurely, after less than five years.

The company did not disclose the reasons for Maier's departure. According to the German newspaper Handelsblatt, power disputes in the Volkswagen Group are behind the decision. For a long time, there have been reports in the media that Volkswagen is bothered by the success of Skoda, whose models compete with other cars of the group beyond expectations.

Skoda Auto also manufactures cars in China, Russia, Slovakia, Algeria and India, mostly through group partnerships, as well as in Ukraine and Kazakhstan in cooperation with local partners. It operates in more than 100 markets.

Volkswagen on Thursday reported a pre-tax loss of 1.4 billion euros ($1.6 billion) for the first half of 2020. The group, which in addition to Skoda, also includes the Porsche and Audi brands, said revenues plunged by 23 percent to 96.1 billion year-on-year.

The 1.4-billion-euro loss marks a steep decline from the 9.6 billion in pre-tax profits the group earned over the same period in 2019.

"The first half of 2020 was one of the most challenging in the history of our company due to the COVID-19 pandemic," said finance chief Frank Witter.