Volkswagen is going to move the production of its Volkswagen Passat model to the Czech Republic, VW CEO Herbert Diess said at the a press conference. The decision is part of Volkswagen’s new five-year plan for 2019-2023, which was reviewed by Volkswagen’s supervisory board. Production will shift to Skoda’s Kvasiny plant, which should put an end to speculations that some of Skoda’s production may be moved to Germany due to lack of production capacity. Diess added that the Kvasiny plant will also produce Skoda Karoq and Seat Ateca.
Regarding the issue with labor shortage sin the Czech Republic, Volkswagen intends to expand production in Eastern Europe, though it provided no more details. Handelsblatt, a German economics news site, claims that Volkswagen is currently considering locations in Bulgaria or Turkey. We remind that earlier this year, Volkswagen has been pressing Skoda to shift production of some of its models, like Superb, to Germany, despite higher labor costs. However, these plans seem to have been dropped, as Volkswagen’s Emden plant, which was supposed to take some of Skoda’s production, will be refitted to electric car production. Volkswagen intends to invest a total of EUR44bn in electric car production, which means that Skoda might lose its R&D role in the sector that was initially awarded by Volkswagen.
As far as new plants are concerned, we remind that previous rumors suggested they will be under Skoda’s management, rather than directly under Volkswagen. Skoda already has some partnerships, mostly for car parts, in Eastern Europe, and there has been some speculation from Bulgarian media that a car parts supplier near Sofia could be expanded into a new Skoda plant. At this point, however, there has been no confirmed news, only media rumors.