Skoda eyes new move upmarket

Last week’s debut of the sleek, premium-looking Skoda Vision C concept may be more than a motor-show one-off, as parent group Volkswagen seems keen to push its brand ever further upmarket to help meet its commitment to sell 1.5 million of the Czech-built cars by 2018. Skoda sales slipped a little last year, but the marque is still nibbling at a million sales a year.

The move comes as VW is reportedly rethinking its plans for an ultrabudget brand to compete with Renault's Dacia. Volkswagen engineers are reportedly unconvinced such a cheap model can meet VW's quality and safety targets.

A move upmarket for Skoda could create friction elsewhere in the group, though. As well as bringing some Skodas into stronger competition with their VW-badged cousins, it would give Seat, Volkswagen's problem child, even more headaches.

Seat had a good year in 2013, as the new Leon helped boost overall sales by 11 per cent, but overcapacity at its key plant in Barcelona meant Seat still posted a loss. That wasn’t helped by an abortive move into the Chinese market, where, slapped with hefty import taxes, Seat sold just 1,100 vehicles in a 20-million-car market.

Shifting Skoda up a notch could let Seat build cheaper models for growing markets in eastern Europe and Asia, but such cars could also undermine Seat’s image in more mature European markets.

It's a delicate balancing act, according to VW's head, Martin Winterkorn.

“Why should Skoda build only practical cars? However, we must ensure precise distinctions are made between the brands, that the brands interact well and that everyone finds their corner.”