Škoda: the largest car manufacturer in Czechia and one of the oldest in the world
Škoda Auto boasts one of the oldest unbroken histories among car manufacturers still operating today. It is the fifth-oldest company in the world still producing cars, after Daimler, Opel, Peugeot, and Tatra, another Czech company – meaning that two out of the five oldest car manufacturers still operating today are Czech.
Škoda has to be one of the most globally well-known Czech brands today. But its image abroad wasn’t necessarily always positive – during the Communist era, Škoda became something of a laughing stock in the West, and was the butt of many a snide joke.
However, it is a testament to the enduring power of the brand that even when it was at the height of its notoriety in Western Europe as a symbol of shoddy Communist design and engineering, the car still sold extremely well throughout the 1970s and 1980s, especially in comparison with other Eastern bloc cars such as the East German Trabant and the Russian Lada, which saw nothing like the same sales.
A further feather in Škoda’s cap is that after the fall of the Iron Curtain, the company didn’t shy away from bold marketing tactics that tackled Škoda’s poor reputation abroad head-on. Rather than trying to hide it or pretending it didn’t exist, they acknowledged and poked fun at the brand’s reputation in their marketing strategy and advertising campaigns.
This bold stroke of marketing genius helped sales and the company’s brand image abroad enormously - Škoda sales grew by 34%, a waiting list developed for Škoda car deliveries for the first time in the UK, and the company achieved a psychologically important 1% market share of new cars sold there. Before the campaign, almost half of people polled saw Škoda vehicles as cars you couldn’t take seriously. After the campaign, this was down to less than a third.
But in fact, Škoda has a long history that far predates Communism and the Eastern bloc, and originally it didn’t even produce cars, which had yet to be invented at the time of the company’s founding.
The company’s roots actually stretch all the way back to the Austro-Hungarian Empire when, in 1866, Emil Ritter von Škoda joined Count Waldstein's machine shop – which had been established seven years earlier in 1859 – as chief engineer at the company’s headquarters in the west Bohemian town of Pilsen. The 27-year-old Škoda, himself a native of Pilsen, had studied at several technical universities and had also worked abroad, where he had experienced the rapid expansion of world engineering, industry and business. Indeed, if it weren't for the outbreak of the Prussian-Austrian war, he might even have stayed there.
But as it was, the young Škoda arrived at Waldstein's factory bursting with ideas for how to improve and modernise it. However, the count did not share his zeal for innovation, preferring to sell the factory to him rather than give in to the forces of modernisation himself. And so, on 12 June, 1869, Škoda Works was founded.
Emil was an excellent technician, but perhaps not such a great boss. He was said to be bad-tempered, crotchety, and an autocrat – perhaps even somewhat of a control-freak. He personally managed almost every detail of the business, wanting to be present for everything and to make every decision himself. He was also a workaholic, staying at the factory from morning to night.
Under his oversight, Škoda Works expanded from a small factory with 33 workers into a large company which, although it didn’t yet produce cars, did produce all kinds of other things such as cooling equipment, water pumps and pipes, castings for the construction of merchant and warships, and machinery for bakeries, brickworks, sawmills, and gas plants.
With the dawn of the new century, Škoda Works became a joint-stock company. Emil Škoda remained the president and CEO, but he didn't get to enjoy it for very long. The effects of the chronic mental and physical stress he had long been under began to catch up with him, and his doctors recommended that he take a relaxing vacation by the sea or to a spa. He took their advice, but it was already too late – on August 8, 1900, he died suddenly on a train near the town of Selzthal in the Austrian state of Styria, on his way home from a spa retreat. He was sixty-one years old.
The story of Škoda is in fact the story of two separate companies which merged together – so here we will take our leave of poor Emil Škoda and take a little detour to another corner of the Austro-Hungarian Empire at the turn of the 19th and 20th centuries.
Two friends, both with the first name Václav – Václav Laurin and Václav Klement – were two Czechs living in Bohemia. Klement was a bookseller in Mladá Boleslav, and so the story goes, he bought a Germania bicycle from the Dresden-based company Seidl & Naumann in 1894. The bicycle soon broke and so Klement wrote to the company’s local branch asking for it to be repaired. The company gave him a terse response stating that the customer must address them in a “coherent language” – in other words, German, the dominant language of the empire. Klement allegedly felt so insulted that he decided to start developing his own bicycles with his friend, Václav Laurin.
From bicycles the pair quickly progressed to motorcycles, shortly after the founding of their company Laurin & Klement in 1895. Michal Velebný is the curator of the Škoda Museum in Mladá Boleslav.
“The first motorcycle types A and B were financially successful from the start. Václav Klement was a very savvy businessman and managed to secure the sale of several of the company’s motorcycles in England, already at this early stage in the company’s history. He also personally took part in several competitions, such as the Paris to Berlin or Paris to Vienna races. The motorcycles were also successful in competitions that required up-hill riding.
“The A and B types were the breakthrough models for Laurin and Klement, but it was the CCR two-cylinder motorcycle with which they crowned their triumph. It won the 1905 Coup Internationale in France. Back then, the tournament was a sort of unofficial motorcycling world championship. Václav Klement was very proud of this victory and would mention it in his memoirs. It was one of the greatest successes of his life as a businessman.”
After winning the title, the company soon started marketing their machines with the slogan: “Laurin & Klement is the best brand in the world.” They started producing cars in 1905, and the company soon became the largest car manufacturer in Austria-Hungary. They entered the automobile market with the 7 horsepower Voiturette A, which was another success, says Mr Velebný.
“It was bought by rich customers from the ranks of the nobility, but there were also smaller models made for doctors and the middle classes. Initial sales always first took place on the domestic market, but the company was very much based around exports. In the period before the First World War, Laurin & Klement sold a third of their vehicles in Austria-Hungary, a third in Russia and the remaining third in other countries abroad. What’s interesting is that already at this early stage, some of their vehicles appeared in Japan, China and New Zealand. They had a world-wide reach.”
Meanwhile, Škoda Works was finding success at this time primarily as an arms manufacturer – prior to World War I, the company had become the largest in Austria-Hungary.
Following the emergence of the Czechoslovak Republic in 1918, the company was transformed into a multi-sector firm, making locomotives, freight and passenger vehicles, aircraft, ships, machine tools, steam turbines, and power-engineering equipment.
In 1925, Škoda Works acquired Laurin & Klement, and operated henceforth under the brand Škoda Auto. To this day, Škoda Auto still has its headquarters in Mladá Boleslav, the place where Klement and Laurin opened their first bicycle repair shop over 120 years ago. Škoda Auto’s world-famous registered trademark, the winged arrow in a circle, had been entered in the Companies Register by Laurin & Klement in 1923, and today, the Laurin & Klement name is used by Škoda to distinguish especially luxurious editions of some of their car models, such as the Yeti, Octavia, Superb and Kodiaq.
The company enjoyed its heyday in the years prior to World War II – after a decline caused by the economic depression, Škoda introduced a new line of cars in the 1930s, including a new design of chassis with a backbone tube and all-around independent suspension. The new design became the basis for the models Popular, Rapid, Favorit, and Superb. While in 1933 Škoda had a 14% share of the Czechoslovak car market and occupied third place behind Praga and Tatra, the new line made it a market leader by 1936, with a 39% share in 1938.
Sadly, World War II and subsequent events were not so kind to the company. During the occupation of Czechoslovakia in World War II, the Škoda Works were turned to the purpose of serving the Nazi German war effort by producing components for military equipment. Vehicle output decreased from 7,052 in 1939 to 683 in 1944, of which only 35 were passenger cars. The UK and US air forces bombed the Škoda works repeatedly. The final massive air raid took place on 25 April 1945, and resulted in the almost complete destruction of the Škoda armament works.
In the autumn of 1948, Škoda, like all other large manufacturers, was nationalised and became part of the Czechoslovak communist planned economy. The two companies which had merged in 1925 – the parent company, Škoda Works, and the car manufacturer Laurin-Klement, which became Škoda Auto – were separated as part of this nationalisation process, and many other sections were split off from the company. The company was renamed Vladimir Ilyich Lenin Works in 1953, but since the new name caused losses of sales abroad, the name was changed back to Škoda in 1965.
Škoda retained a good reputation until the 1960s, but as the century evolved, unfavourable political conditions meant that quality, engineering development and performance took a back seat to egalitarian affordability. Losing contact with technical development in noncommunist countries and a lack of updates to its product designs and infrastructure considerably weakened the company's competitive position and its brand. The factory concentrated on markets in the Soviet Union and the Eastern Bloc and retained a good reputation in Central and Eastern Europe, but gradually the once-venerable brand became somewhat of a joke in the West, especially during the 1970s and 80s.
However, despite Škoda’s poor image in the West, the cars remained a common sight on the roads of the United Kingdom and Western Europe throughout the 1970s and 1980s, causing the BBC to state that “the company must have been doing something right.”
In 1991, following the fall of Communism in Czechoslovakia and the rest of the Eastern bloc, Škoda was acquired by the Volkswagen Group. However, Škoda's image abroad was slow to improve at first. Despite a dramatically improved product and rave reviews of the 1994 Felicia and the 1998 Octavia, sales were unimpressive. The company faced the huge obstacle that, at the time, the perception of the average UK buyer was that it was still extremely embarrassing to be seen driving a Skoda and that 60% of people polled said they would ‘definitely not consider’ buying one.
After this the company changed tactics – realising that they could no longer go on pretending that people didn’t believe Skodas were terrible, they launched a clever marketing campaign in the UK in the year 2000 when the Fabia launched, with the ironic tagline, "It’s a Skoda. Honest."
The ad campaign showed people making fools of themselves in various ways by assuming that because the car was so good, it couldn’t be a Skoda.
The campaign was a roaring success – the advertising was almost twice as effective in getting noticed as the average car ad. For the first time in its UK history, a waiting list developed for Škoda cars and by 2005, Škoda was selling over 30,000 cars a year in the UK, a market share of over 1%. UK owners have consistently ranked the brand at or near the top of customer satisfaction surveys since then, and as this 2002 broadcast from the Czech Radio archive makes clear, that is something that makes the Czechs very proud.
“Over the weekend, the Škoda Superb was declared ‘luxury car of the year’ in Scotland by the Association of Scottish Motoring Writers. We should be proud of such an accolade because the Superb was up against some stiff competition – the likes of the more expensive models of the Mercedes-Benz E-Class and the Renault Vel Satis.
“How the Superb will fare in the coming months will probably be decided by customers outside of our country. The task will be to persuade them, like the Scottish journalists, that luxury cars can be made not only in Germany, but also in a small central European country called the Czech Republic.”