Skoda pricing vs VW pricing

[VAG newbie]

I have been puzzled for a long time, so are many people in this forum, that what the heck is Skoda Aus doing, by pricing the equivalent Skodas so close (or even higher) to their VW counterparts. eg. recently I spec'd up a Passat, the price turns out to be very close to the Superb (give it or take some options, some you get in Superb, some you get in Passat).

But I just bumped into this article during the launch of Skoda in 2007 from carsguide (all the quotes from this article will be in italic):

Ultimately, too, if the Czech is a success it could cannibalise VW sales.

`Yes, we have to be mindful of that," Wiesner says. "That's why it has taken such a long time to put this together.

"We need to be very careful how we approach both marques, because there's no point robbing Peter to pay Paul.

"You get one opportunity to do it properly."

Wiesner conceded that positioning Skoda and not sacrificing VW sales was one of the hardest aspects of developing the new business.

So Wiesner had no intention to compete Skoda with VW in the first place.

"We're hoping the Skoda buyer will be an aspirational European buyer who might not have been able to stretch themselves before," Wiesner says.

"They might always have been Japanese buyers who have aspired to Europe and hopefully we'll give them that opportunity."

So his intention is compete with the Japanese (and Korean for the same reason).

Then he wasn't considering the Octavia to be in the same class as Golf during the launch. He considered it as a competitor to all mid sized car including Passat:

OCTAVIA

PEOPLE familiar with the VW Passat recognise the Octavia.

Like the Passat, this mid-size offering is available as a front-wheel-drive sedan and wagon and will be aimed squarely at the premium-priced Japanese models such as the Mazda6, Honda Accord Euro, Subaru Liberty and soon-to-be Ford Mondeo.

SUPERB

THE Superb is essentially a long-wheelbase version of the Octavia pitched into the higher end of the market.

In fact, it might be true. I have been a long time Honda user, and recently I've upgraded to VAG (hence my user name). I went all the way to the top, yet still within the budget range of Japanese cars.

I believe many people have chosen the RS, or Scout over the Forrester, or all the way into Superb wagon for those who want extra room. I doubt if there are many Golf buyers who bought Octavia eventually because of the extra equipment.

Well, I think that explains for its crazy pricing, although I must say some of the introductory pricing had been overly optimistic, like the MY09 Superb Elegance without leather and GPS, yet cost $1000 more than the MY10 Superb. We'll see what happen with Fabia and Yeti, in a year or so, the price may drop again....

[dru]

I was looking into buying the golf, but as soon as i saw the price for a 4 door gti without the extras i was thrown off. Then i saw the octavia rs pricing and was impressed, even more impressed by picking up a even better deal on a my10 rs! Never considered the passat or forester

[GTREA]

When I bought my MKVI GTi I had to walk past the Skoda dealer to sort the finance etc.

I remember seeing the RS Wagons and thinking "**** I'd rather one of them than my Golf"

(I prefer Wagons to Hatches)

Anyway it has come time for the mrs to replace her Pathfinder, so off to Skoda I went for an RS Wagon, turns out the Mrs liked the Superb Elegance V6 Wagon, and I liked it to, but at $63'000 that puts it above the, what I would consider , more attractive 220kw Highline Passat wagon, which really has all the features we would ever need anyway.

Anyway....looks like were back to RS Wagons now

[RSOK]

Well yes I suppose you're right, Skoda cars are perhaps not as "cheap" as some may expect based on what they've been lead to believe. After all Skoda is fairly well known globally as "Volkswagen's entry-level brand" but then you see some of the retail prices and think "How is this entry-level?".

I still see plenty of value in both Skoda and VW cars when compared to competitors though, and if you're tossing up between a similar VW and a Skoda model well let's face it, you're going to be fairly happy with whichever product. But would VW Aus lower the pricing of Skoda cars to sell more of them? In the long-run this is probably too much of a risk to it's mainstream VW brand, not to mention obvious supply-issues in getting more Skoda cars to buyers in under 6 months!

Why did I choose Skoda? I bought my Octy RS on the basis that VW did not provide an equivalent in terms of boot space (the Golf GTI being the obvious choice) and yet when I thought about the performance coupled with the practicality of the RS and it's identical build-quality (with arguably a little more character then the typical VW sterility) I guess I didn't really expect it to be 'heaps' cheaper than the closest VW model.

[spellbound]

When i bought my RS back in 2008 they fell all overthemselves to knock $4.5k off the price , not so with a GTI .

Only switched to the GTI in june when they had free on roads to save $5k .

SKODA will discount their prices on any model .

[Brycem]

Using the uk and europe as pricing benchmarks and taking into account relative spec levels skodas are far too expensive here. Contrary to popular misconception skodas are not built using the same quality of materials as vw. There are obvious areas where costs have been cut and given this to be the case the price should be adjusted accordingly. I have both an rs wagon and gti and I can clearly see where extra money has been spent. I love my skoda and time may prove that it has been assembled better but you can't escape the fact that the golf is made of higher quality materials. There are also brand image and positioning considerations which should allow vw to command a premium but it doesn't in this market. My cars are about eight thousand dollars apart on price in the uk but the same price here. How can that be justified?

Vw dealers also do deals and on gtis. Vw have a corporate discount programme which, amongst others, members of professional bodies bbenefit. I haven't heard if skoda offer this?

[Brycem]

Oh and I should add skoda very often run offers in uk and Europe which means the eight thousand dollar differential is nearer twelve!

[VAG newbie]

The Golf GTI and Octy RS actually don't compete with one another. They complement each other. As many of the RS buyer above, many of them have chosen RS for it's practicality and space which Golf can't provide. So rather than losing Golf customers to others, VW Aus have kept them within the VAG circle. There just isnt any cars out there that can compete in this segment.

But what about the entry level Golf and Octavia? At $24990, I would assume that most Golf buyer will be either single young working class, or housewives buying it for a family second car. These are Mazda 3 buyers. The Octavia is certainly too big for them.

Using the uk and europe as pricing benchmarks and taking into account relative spec levels skodas are far too expensive here. Contrary to popular misconception skodas are not built using the same quality of materials as vw. There are obvious areas where costs have been cut and given this to be the case the price should be adjusted accordingly.

HI Brycem, I started this thread after the discussion with you on Skoda image, but somehow we went off the topic discussing pricing. So here we go. I think you maybe right. Just compare the Superb and Passat. The aluminum and wood inserts in Passat Highline are real, where as in Superb it's fake. The leather used in the Passat is also of higher quality Nappa leather. But I must praise the ability of the Czech's in glueing their cars together. The quality feel of the Superb is definitely up there with the best and you can't really tell the wood is fake! (compare with some of the Asian cars)

One question. In UK, is Skoda distributed by VW as well? Certainly in Aus, Wiesner doesn't want us to see Skoda as an entry brand to VW, but more a unique affordable Euro marque. Here is further quotes from the same article:

Wiesner emphasised that Skoda and VW would be distinct, even more so than BMW, which sells its Mini brand through associated dealers.

"You won't see shared Volkswagen-Skoda showrooms. We've got to give them more separation," he says.

"Obviously we need to protect what we've done with Volkswagen, but at the same time grow the Skoda branding."

So that could explain the premium they charge on the Skodas. Still, the value for monety is still pretty good as compared to some of the Japanese offerings we have here.

[Brycem]

About Volkswagen Group UK Ltd. Same set up as here cars distributed by factory.

Octavia rs hatch and gti compete. Wagon doesn't. We can't escape the pricing. They are at it!

[GTREA]

They may say the Golf Gti dosnt compete with RS Octavia, but along with Renault Megane it was certainly on mine.

Golf wagon would compete with Octavia wagon wouldn't it?

I can see why Skoda Australia may want to price them a little closer to the VW product here, as we last had Skoda here in what 1980 with the 120L?

Now bang there back with a product so radically improved in every department, and yeah basically as good as a VW in it's own right.

Most people in Australia would have forgotten about 'old' Skoda....and I'm sure thats just what there hoping.

Whereas in Europe they have always had Skoda, they have watched the eastern bloc 120L transform slowly thru some right ****boxs to the product we have today.

It's hard to change people's perception of a badge when you see it everyday, hence the lower pricing over there.

Well that's my 2c anyway

[RSOK]

Probably spot on GTREA, the fact that Skoda has to battle years if not decades of poor public image over in Europe owing to the sh**boxes it made pre-Volkswagen takeover means that it necessarily has to provide a price incentive to win customers over.

VW Aus is in a much better position to pitch the Skoda brand to Aussies as a genuine semi-premium alternative to the likes of VW, Honda, Subaru etc without having to negate anywhere near the same level of outdated public perceptions as in Europe.

This would explain the pricing strategy that sees Skoda models in Aus going virtually head to head with like VW models (at least in terms of RRP; evidence elsewhere on this forum suggests that Skoda dealers are more likely to "do a deal" than VW dealers and so the driveaway price may yet see Skoda owners come out on top).

As for differences in quality of VW vs Skoda models, look personally I don't value some extra sound deadening material, flashier trim detailing inside the cabin, nicer pot plants at the dealership or glossy magazine ads, certainly not if it's my hard-earned paying for it! Whilst I have little doubt that VW cars have a more upmarket presentation to the eye, as far as the driving experience goes, I stumped for a Skoda because, among other practical considerations including boot space, it felt better to drive - steering, ride comfort, to my backside I preferred it over the VW, but that's just me.

But let's face it, cars are an emotional choice as much as anything, and people put different values on different aspects of owning a car (eg more standard features vs better fuel economy vs it's a "cooler" car to be seen in (badge-snobbery?) vs resale value vs performance etc etc)... so it's hard to say what the true "value" of a car is to someone as opposed to it's advertised "price". I'd suggest that if everytime you slide behind the wheel you grin and feel completely contented, then you've bought the right car, no matter what you paid.

[pologti18t]

Let's see. I could get a 2011 Octavia RS 5 door manual drive away for $38K.

Over and above the Golf GTI it gets sat nav (2500), 18 inch wheels (1200), heated seats (?), LED DRLs (?)

I was offered a Golf GTi (5 door, manual, no options) for $39500. So the Octavia is certain priced sharper and optioned higher than a Golf GTI.

[VAG newbie]

Let's see. I could get a 2011 Octavia RS 5 door manual drive away for $38K.

Over and above the Golf GTI it gets sat nav (2500), 18 inch wheels (1200), heated seats (?), LED DRLs (?)

I was offered a Golf GTi (5 door, manual, no options) for $39500. So the Octavia is certain priced sharper and optioned higher than a Golf GTI.

But the fact is, people who are entitled to corporate discount get more from VW than Skoda. Even people that are not entitled to it, as long as they are willing to go through a broker, they'll still get better deal with VW.

I choose Skoda over VW also for it's built quality and reliability. Skoda is up there with the very best while VW is down there with the very worst.

[pologti18t]

But the fact is, people who are entitled to corporate discount get more from VW than Skoda. Even people that are not entitled to it, as long as they are willing to go through a broker, they'll still get better deal with VW.

I choose Skoda over VW also for it's built quality and reliability. Skoda is up there with the very best while VW is down there with the very worst.

You sure about that? The discount offered at a corporate level for a Octavia and a GTI was about the same for me (work for a large bank).

Car for Car : you will be about to get a cheaper Octavia RS compared to a similar spec Golf GTI by a large margin. And surely that's what matters.

[theduckster]

In July, Skoda Australia adopted the same corporate policy as VW Australia use. So the benefits of corporate pricing should now be similar between the two brands. In some cases VW will be able more of a discount as the incentives are geared towards moving stock that is held in compound just to turn over the stock and Skoda just don't hold the amount of stock that VW can afford too. On vehicles that have too be built from the figures I have seen on the two brands they are pretty comparable.