Skoda Sells So Many Cars, It Now Looks To Outsource Production

Skoda is having trouble to respond to the booming demand and might outsource some production to a contract manufacturer.

The Czech car maker expects its Kodiaq and Karoq SUV models to lead production at Skoda at over 2 million vehicles per year by 2025, from 1.2 million currently.

Despite the forecast, Skoda is already grappling with stretched capacity at its plants, Reuters reports.  “There is a wide range of options to cover order peaks,” Skoda said on Monday, adding that taking advantage of unused capacity in VW Group’s other factories will not do the trick.

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

A new factory outside Czech Republic among Skoda’s options

In March company sources said Skoda was looking at ways to build more cars, including building a new factory outside Czech Republic.

VW Group labor boss Bernd Osterioh said last week that shifting some of Skoda’s production to Germany by 2019 will not solve the Czech brand’s bottlenecks. Skoda has passed Audi within the Group to become the second most profitable unit after Porsche.

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Osterioh added that a decision on how to increase Skoda’s output will likely be reached by November, when the VW Group’s supervisory board will decide on the rolling budget for capacity, technology and equipment.