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Volkswagen feuds with thriving stablemate Skoda

BERLIN, Oct 4 (Reuters) - Volkswagen managers and unions are seeking to curb competition from lower-cost stablemate Skoda, move some of its production to Germany and make the Czech brand pay more for shared technology, company sources told Reuters. As VW struggles to cut jobs and spending at German factories and turn the page on dieselgate, Skoda's superior car reviews and profitability have intensified the brands' rivalry within the Volkswagen empire. VW now wants to reduce what it sees as Skoda's unfair advantages - combining German technology with cheaper labor - and reaffirm the top-selling brand's primacy ahead of a wave of new electric car launches, the sources said. The tussle between VW and Skoda is reviving tensions at the heart of the Volkswagen group between profits and jobs, and between central control and autonomy for its 12 vehicle brands. "Instead of devoting our efforts to beating Tesla, we may just be setting up a futile internal conflict," said one manager. Once the butt of jokes, Skoda has blossomed under 26 years of VW group ownership into a successful mid-market carmaker, steadily winning business from rivals - including VW - and surpassing even Audi's operating profit margin last year. At the same time, VW is facing thousands of job cuts as management moves to trim excess capacity at German factories. Its powerful domestic unions see Skoda's success as both a threat and a potential lifeline. VW workers' representatives are now demanding the transfer of some Skoda production to their underused German plants, a source close to the supervisory board told Reuters. The proposal aims to offset declining output of the VW Passat and aging Golf that could otherwise threaten more jobs. They are also making the case that Skoda should pay higher royalties to use VW's main common vehicle platform. The so-called MQB architecture also underpins mid-sized models from the group's Audi and SEAT brands. Responding to the news, Czech Prime Minister Bohuslav Sobotka said he would meet Skoda management and unions to ask for clarification. The government will seek to ensure that VW investment plans are followed through and that "production is not moved outside the country," a statement released by Sobotka's office said. Skoda's main union warned that a production shift could cost as many as 2,000 jobs. VW's works council declined to comment.

Autoblog Podcast #366

Episode #366 of the Autoblog podcast is here, and this week, Dan Roth, Jeff Ross and George Kennedy of Boldride.com talk about the 2015 Lincoln Navigator, Volkswagen's US market woes, and the drama at the Rolex 24 hours of Daytona. We start with what's in the garage and finish up with some of your questions, and for those of you who hung with us live on our UStream channel, thanks for taking the time. Check out the new rundown below with times for topics, and you can follow along after the jump with our Q&A. Thanks for listening!
Autoblog Podcast #366:
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VW air rule violation allegations 'stunning,' $18B fine unlikely

The big automotive news today was the US federal allegations that VW quietly and illegally installed software on approximately 482,000 diesel vehicles sold in the United States so that they would not return substandard results on government emissions tests. To say the least, this is potentially a very big deal. You can read the details of the government's allegations here. The problem seems to be with the NOx trap. Sam Abuelsamid, a former AutoblogGreen editor who is now a senior research analyst at Navigant Research's Transportation Efficiencies program, told me that there were some hints that VW's diesel emissions strategy had issues a while back. The vehicles affected by today's announcement are all equipped with the 2-liter, 4-cylinder TDI, he said. They all have the lean NOx (nitrogen oxides) trap, whereas all other current modern diesels use urea to treat NOx emissions. "When VW launched those vehicles, I went to the TDI launch program in Santa Monica and asked them if they were going to put the diesel engine into the Tiguan because that would be an ideal application," he said. "They said no, because it would be too heavy. Turns out, the NOx trap was enough to meet the emissions standards in the smaller cars, but not the Tiguan. That seems to be where the problem is, in the NOx trap. All the other big VW and Audi diesels, they use urea, just like BMW and Mercedes do." Abuelsamid added that, in California, to do an emissions test, testers don't stick a probe up the exhaust, as you would suspect. Instead, they just do a visual test to make sure nothing was tampered with and then plug a scanner into the OBD-II port to read the codes. The news today basically says that the cars were programmed to send out false codes, giving readings that testers are looking for instead of what's actually going on. "That's the background, as far as I know at this point," he said. This could be "a black eye on the auto industry." - John O'Dell Speaking at the AltCar Expo in Santa Monica just hours after the news first broke this morning, Edmunds.com's John O'Dell said the Fed's allegations were "stunning." The idea that VW might have gamed the system, he said, "underscores how important EPA clean air numbers are, that a company would allegedly stoop to this to try and meet them. Obviously, people are paying attention to that sort of thing.