Thirty years since decision to sell Škoda to Volkswagen

Photo: Škoda Auto

It is exactly 30 years since the Czechoslovak government announced the key decision to sell carmaker Škoda Auto to German giant Volkswagen. The move followed months of talks, though fears that a major domestic enterprise would be undermined were not borne out and today Škoda is the Czech Republic’s largest exporter.

Photo: Cherubino,  CC BY-SA 4.0

Škoda Auto was founded as Laurin & Klement in 1895 and acquired its present name after acquisition by the Škoda Works conglomerate in the mid-1920s.

The Mladá Boleslav-based firm was nationalised in 1948, the same year as the Communist takeover of Czechoslovakia.

Little over 12 months after the Velvet Revolution, the country’s newly installed democratic leaders announced a decision on the future of Škoda Auto on this day in 1990.

Following months of negotiations – and concerns about a loss of control of the “family silver” – it was to be sold to German carmaker Volkswagen.

Petr Pithart,  photo: Kateřina Cibulka,  Czech Radio

Then Czech prime minister Petr Pithart recalled that period in an interview some years ago for Czech Radio.

“The negotiations were quite dramatic, though the public were unaware of that. At some moments it looked like it wouldn’t work out. We insisted that a simple assembly plant wouldn’t be built here. That meant winning agreement that the heart of every carmaker, the engine plant, would be here. And if there were an engine plant, that would mean development and research – meaning hundreds, perhaps thousands, of people who would be involved in development at the highest level.”

Volkswagen won the contract despite competition from a consortium of Renault and Volvo.

The deal was done as a direct sale from the Czechoslovak state to the German giant and did not take place within the Large Privatisation, a major plank of that period’s transition to capitalism.

Photo: Ralf Roletschek,  CC BY-NC-ND 3.0

The Czech News Agency says there was much disagreement with the takeover of Škoda Auto. There were claims Western firms wished to snap up Czechoslovak ones with a view to shutting them down and heading off competition. Some older people even referred back to the German occupation.

Nevertheless Volkswagen took control of Škoda Auto in early 1991, committing to billions of crowns in investments.

Journalist David Šprincl of car magazine Svět motorů told Czech Radio that fears that Volkswagen would reduce Škoda to a “low-cost marque” and assembly centre had proven unfounded.

Photo: Škoda Auto

“Škoda has managed to maintain a different approach. It has managed to introduce smartness, when it comes to all the elements included in the cars. It’s also been visible for decades at Ice Hockey World Championships and at the Tour de France – and does so independently. Volkswagen definitely didn’t turn it into an assembly plant, as was feared. Rather it is building on its good image, which is different from that of other brands.”

Today Škoda Auto is the Czech Republic’s leading exporter and the biggest player in the hugely important auto sector.