Skoda looks for way out by decentralizing operations

Czech carmaker Skoda is one of many carmakers that seek to restore its glory in the face of the COVID-19 pandemic, fast-evolving market trends, and sweeping chip shortages.

Globally, car manufacturers saw their production cut by over 10 million units in the first 11 months this year, according to AutoForecast Solutions.

The Czech subsidiary of Volkswagen AG sold over 700,000 units in the first three quarters this year across the globe. The carmaker said sales could have reached 950,000 units if there had been enough chips.

Another blow came from the Chinese market, where the brand seems to have suddenly gone out of favor.

Until very recently, China was Skoda's largest market, with sales reaching up to 340,000 units in 2018. Its sales in the country plunged in the first three quarters this year.

Analysts said local Chinese brands such as Geely and Great Wall Motors are rising to win over young car buyers from international volume brands including Skoda, Hyundai and even Volkswagen and Toyota.

The growing popularity of electric cars in China, which is so far the largest market for such vehicles, are alluring car buyers away as well from international brands as they have not been so quick as local marques in electrification.