Karoq to join severe Skoda supply shortage

SKODA Australia director Michael Irmer has revealed that the Karoq medium SUV will face an immediate and severe supply shortage when it arrives in June next year, limiting its potential to become the car-maker’s top seller.

Speaking at the national media launch of the Octavia RS245 on the New South Wales central coast this week, Mr Irmer said that Skoda manufacturing facilities were running at capacity and the Karoq will be supply limited from launch, joining the continued shortfalls in Fabia and Kodiaq availability for Australia.

“At the moment we already know we’re not going to be getting enough Karoq,” Mr Irmer said.

“We know that we could reasonably double the number of Karoq (projected volume) or three times the number of Karoqs we currently have for sure, but we have to take note that the factory is looking at expanding capacities.

“Unless conditions change in other parts of the world and we can fetch production from other markets, the factory is running at absolute capacity.

Technically, the Skoda factories are running at capacity for Fabia, for Octavia, for Kodiaq. The only car where they can do a little bit more at the moment is Superb – that’s it.”

Skoda Australia will be limited to 100 units of its Yeti replacement per month, fewer than the 150-to-200-unit allocation of the Kodiaq large SUV in 2018, and the 160 monthly units the top-selling Octavia has posted on average in 2017.

Mr Irmer admitted that this was unfortunately not reflective of market trends that, according to VFACTS November figures, has seen the medium SUV segment grow by 15.4 per cent to 151,043 sales year-to-date.

The large SUV class, in which the Kodiaq competes, has dropped 2.9 per cent to 105,713 units over the same period, while the Octavia’s medium car cohort sunk 12.9 per cent to 38,642 sales.

It leaves Skoda having access to greater supply in smaller segments, and more restricted supply in the Karoq class. But this, Mr Irmer added, was a global trend.

“We know only how many Karoqs we’ll have, and we can next year get about 600 cars … depending on when we go to market” he said.

“But we know that the five-seat SUV market is much better than the seven-seat SUV market. (We) have a shortage of Kodiaq (but) the shortage is much greater on Karoq. The only way to get more supply is to get Karoqs from another country, but it’s very unlikely that anyone would give up a single unit.

“Skoda (is) trying to increase their production capacity as a whole, because this is not a phenomenon just for Australia, it’s worldwide. The only way to fix that for Karoq is to increase production capacity. That is not something which is able to be solved in six months, that takes typically a year or two years.”

Asked whether Skoda’s global headquarters has given the Australian outpost an indication of when supply might free up, Mr Irmer replied: “Not yet at this stage, that is at the moment a discussion.

“It’s a bit too early for us to know that. I think that the plan for that is not yet finalised.”

Mr Irmer said that Octavia supply was keeping up with demand, and the medium car was not expected to grow substantially in 2018. November year-to-date sales of 1745 were line-ball with last year, and if that remains it would eclipse the 1200 units of Karoq available, if not the 1800-to-2400 sales forecast for Kodiaq.

A similar problem exists for the Superb, which has soared 43.1 per cent to 926 sales year-to-date, but within a large car segment down 20.4 per cent to 25,804 units.

Supply is free with that model, but restricted with the Fabia, which has soared by 22.4 per cent to 952 sales year-to-date, in a light car segment down 10.5 per cent but within a far greater 73,656 sales pool.

“Because we’ve been having (current generation) Octavia for three or four years we’ve found its potential, I think it’s at the right level, and at its maximum potential given where the segment is,” Mr Irmer continued.

“We have not been able to get supply with Fabia, (it) could have more potential right now because the segment is very big. It has been selling 650 in the first six months, a bit more than 300 in the second six months. You can clearly tell it’s just pure shortage of supply.

“At the moment, we cannot get a single additional unit. We’re getting supply which is similar to what we have current levels for next year as well. We know that already. That means we can’t expect much growth out of the car.”

The managing director added the Fabia could have “doubled what it does right now”. The five-door light hatchback and wagon will finish the year with just over 1000 sales. Twice that number would see the Skoda eclipse the Ford Fiesta and Renault Clio, which it currently lags behind by about 500 sales per annum.

Mr Irmer said he was optimistic about the situation.

“Everything bad comes with something good,” he told.

“The limited supply enables us to build a sustainable growth strategy that we don’t need to go too aggressively (with retail offers) only to pull back.

“Look at how many brands you would have seen in the past couple of years who had the skyrocketing stock and then everything collapsed back again. We want to build our business sustainably.”