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VW's Skoda says might outsource production to meet demand

Auto News - Published on Thu, 14 Jun 2018

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Reuters quoted Volkswagen's Czech brand Skoda as saying that it might outsource some production to a contract manufacturer as the division looks to respond to booming demand. Already grappling with stretched capacity at its Czech plants, demand for its new sport-utility vehicles could lead production at Skoda to surge to 2 million cars by about 2025 from 1.2 million currently, the automaker said.

VW's labour boss Mr Bernd Osterloh told Reuters that shifting some production to Germany by 2019 will not solve bottlenecks at Skoda, which has passed Audi to become the second-most profitable unit at VW group after sports-car brand Porsche.

Skoda said in an emailed response to a question from Reuters, "There is a wide range of options to cover order peaks," adding that taking advantage of unused capacity within the multi-brand VW group will not do the trick.

Skoda said that "For that reason we keep looking into alternatives that also include possible contract manufacturing. Demand is exceeding our production capacities also in 2018."

Major carmakers including Germany's big three BMW, Daimler and VW routinely use contract manufacturers such as Magna or Finland's Valmet Automotive to outsource production, earning them greater flexibility while saving investments in their own facilities and resources.

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Posted By : Rabi Wangkhem on Thu, 14 Jun 2018
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