Thomas Schäfer is the youngest head of Škoda Auto in modern history. In his fifties, the native German took over the management of the Mladá Boleslav carmaker at a time when he was going through difficulties in production due to the covid and at the same time a transformation towards electromobility.
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“People will have to get used to my slightly different management style. I don’t want to wait for reports, I like to ask directly and go to the canteen here, “laughs the man who flew to the Czech Republic from South Africa, from where he was responsible for VW production on practically the entire African continent.
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The company is expected to launch a new electric car next year, probably a coupe derived from the current Enyaq model, a new North African region has been put in charge of the entire VW Group, and Thomas Schäfer would also like to see a woman in its lead for the first time. We bring you the second part of an interview with the Chairman of the Board of Directors of Škoda Auto. You can see the full text in the video.
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What is the position of Škoda Auto within the Volkswagen Group?
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We are a valuable brand. We are considered a brand that produces highly functional cars that customers like. In addition, people from our group also like these cars. For example, Herbert Diess, CEO of the VW Group, said that Škoda is the brand with the highest growth potential. Let’s take his word for it.
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How is the current coronavirus pandemic affecting the company now?
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Of course, our absolute priority is for our employees to avoid the risk of infection. We have created a set of about 80 safety measures and I think they are proving to work because there was no outbreak in the plant. But when you see the numbers in Europe or even here in the Czech Republic, there is a real risk that there may not be enough employees due to diseases and quarantines.
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Yes, so far, we are working full time.
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But doesn’t it fully mean that production is the same as last year?
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Not that. We had to introduce hygienic breaks, during which it is necessary to clean the work area and people will have more rest. Otherwise, we work three shifts. However, there are also problems with suppliers. Somewhere the supplies were really stuck and everything was at the last minute. But our team does a great job and we work. We are glad that the whole economy has not been switched off.
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There is talk that you are considering stopping production…
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No, absolutely not. We need every second, many customers are waiting for our cars. Plus, it’s really not necessary. We have measures that work, and there is no reason to close the factory. The only thing that could cause problems are outages in the supply of parts. Nothing else. We want everything to run normally by Christmas.
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What is the production now compared to last year? October 2019 vs. October 2020?
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The decline is about 20 percent. Due to the already mentioned breaks in work that we have to take.
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Just for breaks? Because according to the Škoda unions, you had problems with the software of the new Octavia. Is it already solved?
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This is a common problem that occurs when switching to a new model. It doesn’t matter if it’s an engine, a gearbox or whatever. But the problems have been solved and customers are satisfied.
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And what are the current waiting times, especially for the Škoda Octavia?
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It depends on the model. Octavia is in high demand, it sells best, there it can be three to four months. From the manufacturer’s point of view, it’s good. Not so much from the customer’s point of view. We try to produce cars as quickly as possible, but the time is difficult and we are happy that we can continue production at all.
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How will a coronavirus pandemic affect your financial results this year?
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When the pandemic began, we reduced costs that were not absolutely necessary, carefully managed the others, and tried to have cash. That, at least for now, has allowed us to be profitable. But of course – every unproduced car, every minute the plant closes, is a disaster. So far we are lucky. We are strong and financially sound. This year will not be great for anyone, but at least we will end it in good health and we are ready for the next one.
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So what will be the revenues for 2020?
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It’s too early for that. We do not know if there will be another lockdown here or in Europe. Ask me again in early December.
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We’re pilots with everyone on board
Collective bargaining begins at Škoda Auto this week. Will the amount of remuneration and wages change?
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No. Collective bargaining does not concern financial matters, but the length of working hours, annual bonuses and the like. We discussed this with KOVO and I think it is necessary to establish a sensible approach this year. We face a bigger problem than fighting each other. We have agreed on a sensible partnership, and I am sure that the agreement will be good for both parties. This year, no one will have a “magical Christmas”, we have not overcome the problem yet and we must be careful about coronavirus. Our absolute priority is to navigate the pandemic as a pilot with everyone on board.
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Will the pandemic affect the launch of new models in any way?
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We want our major projects to continue and have priority. Even during the first lockdown, these teams worked. The only delay was in India, we could not travel there and we could not send our employees there. There, the cars will be launched four weeks later. But this cannot be avoided today.
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So what models are you planning for next year?
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Several versions of the Octavia, the 4 × 4 model, the RS model, are still being prepared, and these versions will be gradually launched on the market. Then of course there’s Enyaq. Our hit that should change everything. The first electric car from Škoda. The new Fabia will come next year, for which production must start.
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So how many new models are you going to introduce?
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It depends on the definition of the new model. Brand new models will be introduced next year and will be followed by other versions.
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We are preparing a new electric car
And what will these two new models be like?
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One is a Fabia and the other an electric car.
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When will it be launched?
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In the second half of next year.
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Will it be a clean electric car?
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Yes. (According to information from SZ Business, it will probably be an SUV coupe derived from Enyaqu, editor’s note.)
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Back to model Enyaq. What are your ideas about sales?
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Enyaq is now going into production, it will start selling at the beginning of next year. We believe that there will be a great demand for it.
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How do you want to convince customers to buy an electric car – a much more expensive car with a much shorter range?
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The range of Enyaqu is 510 kilometers per charge, which is much more than many customers need.
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Yes, but the price is higher.
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That is true, but the car will sell well on the European market. It costs less than 30,000 euros, is larger than Kodiaq, the interior is spacious, it is as long as the Octavia. It is a big car for a price that is now absolutely competitive in the given segment. I really think this car will be a great success.
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We want a small electric car
What does this mean in terms of sales?
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In the first phase, we plan to produce around 70,000 cars. But it is always possible to increase production. At present, however, the worldwide shortage of batteries is the result of a major shift from internal combustion engines to battery-powered cars. It means a revolution in the whole industry and everything will take some time. We are well prepared for this model. I just have to emphasize again that we need more electric cars. We want to launch them in the near future and we are working on it now.
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So what are your plans for electromobility?
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We definitely need something smaller, a smaller fully electric car. That is another challenge now. But I believe that the world will change faster than we think, and if we look at 2026-2027, for example, we will have to assess our entire portfolio and analyze which models can be electrified. This will mean a radical change in the whole industry.
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Car manufacturers in Europe have to invest a lot in electromobility, can it affect their competitiveness vis-à-vis other global manufacturers?
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Not all automakers will survive, that’s the reality. When you look back, a lot of them are gone. It is a natural evolution. But my main goal is for Škoda to be here for another 125 years. It is important to know the direction the industry is developing, to invest in time and to transform. And I think the local team is doing the right thing in this regard. We have the advantage of being part of Volkswagen. I believe that if any group manages in the future, it will be the Volkswagen and Škoda groups.
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How will electromobility change the production of Škoda Auto?
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We decided not to build a new plant for the production of electric cars, to integrate them into existing production lines. However, changes will be needed in the plant – in terms of preparation for new production. An electric car is much heavier than a regular car. We therefore have to invest a lot in new equipment. Gradually, we will transform all our factories into electromobility. It will take a few years, but it is necessary. There is no other alternative. It will cost money, but you must always invest in new models. Maybe next year to the new Fabia. At least now we know the direction we are going, and we have already started with investments.
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How big of an investment are they?
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If we wanted to build a new plant for the production of 340,000 cars a year, it would cost 750 million euros. I think we have invested around EUR 80 million for the transformation of the current electric car production lines. Fortunately, we recently built a new paint shop. If this were not the case, it would cost about another 100 million euros. It’s big money, but it’s life and you have to adapt. If the industry is moving towards electromobility, it is necessary to keep up with the times. We do not want to be one of those who fell asleep, unable to adapt to technological change. We would end that. Without giving specific examples, you will find many in the history of such.
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We will meet the emission limits this year
Another challenge now facing you is emission limits.
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It is a big task. The limits are strict and the regulation came quickly. But this year we will manage.
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So will you meet the emission targets?
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Yes. It’s a bit of a fight because of the covoid, because production has been delayed, but we can handle it. We have made the necessary investments in technology and we are ready.
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Car manufacturers are now undergoing huge changes – whether it’s covid or electromobility. When do you think it will end and we will return to the new normal?
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I think that in the next six to seven years, years of great change await us. The production cycle and development of new models usually takes three to four years, so it will take one and a half production cycles. I think that sometime in 2030, the world will look completely different. Maybe sooner, but it’s all just crystal ball divination. We have big tasks ahead of us.
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Before joining Škoda Auto, you worked in South Africa. How can you benefit from the experience gained there?
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It was a pioneering job in South Africa – we started production in countries such as Rwanda, Uganda and Nigeria. I believe that similar opportunities are offered for Škoda in North and East Africa. Now let’s try it there, we’ve already talked about the possibilities in Egypt. It is the third largest country in Africa with 80 million people. We will see if I will be able to use the experience from emerging markets here in Škoda and in these markets. Why not.
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I want a woman on the board
What are your personal plans for the next months?
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From a professional point of view, I would like to end this year positively – so that we can manage it and get to a new level next year. I call it “Škoda New Level”. For my team, this means that he did a great job, but now is the time to move on. It’s not done, there’s no time to rest. And what is the next level? We must continue what we have done well, step on the gas and accelerate, look for new markets and do well in the regions of Russia, India and North Africa. And I set my personal job because I found out that there is not a single woman on the board.
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Yes. We have to do something about it. We need diversity. These are the changes we are preparing. Our team will also work more with digital technologies. We have many tasks ahead of us and I am glad that I can lead this company in such a challenging and amazing time. This is a major change that has never happened in the history of the automotive industry.
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