Down 95%, 50,000 layoffs, the world's second-largest automaker hits a major setback

Author: Maple Leaf

A piece of news has gone viral in the automotive circle: Skoda, Volkswagen’s most profitable sub-brand, is set to withdraw from the Chinese market!

There was no grand farewell, only a light and airy “strategic adjustment.”

This century-old Czech automotive brand, which has accompanied Chinese consumers for nearly 20 years and once sold 340,000 vehicles annually, has been revered by many as the “affordable German choice,” yet ultimately could not withstand multiple pressures and quietly exited amid fierce market competition.

By 2025, Skoda’s sales in China will have dwindled to just 15,000 units, a mere 5% of its peak.

Chevrolet is also struggling, having reported its first massive loss of 2.5 trillion yen since its launch, and Honda is facing similar challenges.

It was expected that joint venture cars would gradually be “consumed” by domestic new energy vehicles, but what was surprising was how quickly these automakers collapsed.

The end of one era signifies the beginning of another.

Last year, Chinese automakers reached nearly 27 million in global cumulative sales, topping the global automotive sales charts and ending the 25-year dominance of Japanese automakers.

In this era of great change, Chinese automotive brands have finally reached the pinnacle of the world.

However, the glory of the Chinese automotive industry has just begun.

01

Another foreign brand is “withdrawing” from China.

On March 26, a brief announcement declared the end of an era: the Skoda brand will fully withdraw from the Chinese market by mid-2026.

This most profitable sub-brand of Volkswagen, which once sold over 300,000 units in China, saw its sales shrink to just 15,000 units last year.

From 300,000 to a 95% drop to 15,000, from shining in the world’s largest automotive market to a quiet exit—Skoda’s nearly 20-year “Chinese story” has ultimately come to an end amid fierce market competition.

In its statement, Skoda candidly acknowledged that the reason for its exit is “unable to keep up with the region’s rapid transition to electric vehicles.”

This means that Skoda doesn’t want to leave, but simply can’t keep up.

Yes, unable to catch the wave of electrification, even with Volkswagen backing it, it had no choice but to leave.

Moreover, Volkswagen, Skoda’s parent company, has also struggled in the Chinese market in recent years, with BYD and Geely already surpassing this German giant in sales and achieving partial technological leadership.

By 2025, Volkswagen’s new energy vehicle sales in China are expected to be only about 115,500 units, a year-on-year drop of 44%, with a market share of less than 1%.

Not long ago, Volkswagen just delivered a “torn” financial report: in fiscal year 2025, its operating profit will be only 8.9 billion euros, a year-on-year decrease of 53%; revenue fell by 0.8%, and the operating profit margin was just 2.8%, marking Volkswagen’s lowest performance since the diesel emissions scandal in 2016. Its most competitive luxury brand, Porsche, saw its operating profit plummet by 93% last year.

At the end of last year, Volkswagen closed its domestic factory for the first time in its 88-year history.

And for a company that once reshaped the global automotive industry, Volkswagen had to cut 50,000 jobs in its “hometown” for “self-rescue.”

If the world’s second-largest automaker is in such a situation, one can imagine the plight of its sub-brands.

02

Skoda’s story in China once had its shining moments.

Skoda (Škoda) was originally Laurin & Klement, a car manufacturer founded in 1895 in the Czech Republic, later acquired by the German Volkswagen Group to become its brand, headquartered in Mladá Boleslav, and is one of the world’s oldest four automobile manufacturers.

In 2005, Skoda collaborated with Shanghai Volkswagen, successfully achieving localization and entering the Chinese market, and the following year, its Chinese name was established as “Skoda”; in 2007, the first car, the Octavia, was produced by Shanghai Volkswagen, becoming the third automotive brand under Volkswagen to produce vehicles in China.

With the positioning of “sharing a platform with Volkswagen but costing two to three thousand less,” it quickly gained popularity. Classic models like the Octavia, Superb, Kodiaq, and Rapid supported countless families’ first cars. The saying “Those who understand Volkswagen buy Skoda” made this brand a benchmark for joint venture value.

In 2013, Skoda became the European brand with the fastest sales to reach 1 million units in China. This achievement inflated Skoda’s ambitions, leading to a major decision to separate from Volkswagen and operate independently as a brand.

However, it is worth mentioning that Skoda had such high cost-performance that many consumers at the time referred to it as “cheap Volkswagen,” making it highly favored by Chinese consumers.

From 2016 to 2018, China was Skoda’s largest single market for three consecutive years, with annual sales stabilizing above 300,000 units, steadily increasing market share, earning the trust of over 3 million Chinese car owners.

At that time, backed by the technological support of the Volkswagen Group, Skoda’s 4S stores were everywhere, and factories were continuously operating. From frontline workers to sales consultants, from parts suppliers to logistics personnel, a complete industrial chain supported the stable lives of countless families.

2018 marked Skoda’s peak in the Chinese market, with annual sales reaching 341,000 units.

However, fortunes can change rapidly; the wave of development in the Chinese automotive market came more forcefully than anyone expected.

Under unprecedented changes, the rapid rise of domestic new energy vehicles propelled the surge of domestic brands, while joint ventures and foreign brands retreated step by step.

No one expected that Skoda, dubbed “Volkswagen’s child,” would fall from its peak in just a few short years.

In 2021, Skoda’s sales in China dropped drastically to only 71,000 units; in 2022, SAIC Skoda’s cumulative sales were less than 45,000 units, a year-on-year decline of over 60%. The discontinuation of the new Kodiaq in 2023 was seen as a harbinger of its withdrawal from the Chinese market. By 2025, Skoda’s sales in China are expected to be only 15,000 units, a mere 5% of its peak level. This figure is equivalent to the sales of some popular BYD models in just half a month.

From being widely sought after to being ignored, Skoda’s fall was rapid and caught many off guard.

03

Why did Skoda lose? The core reason can be summed up in two words: lagging behind.

On the one hand, the electrification transition fell completely behind.

As the penetration rate of new energy vehicles in China has exceeded 50%, with domestic brands like BYD and Changan fully ramping up their pure electric models, and Volkswagen also advancing its ID series transition, Skoda has virtually nothing to show in the new energy sector, lacking even a single competitive domestic new energy model. It could only barely sustain itself with gasoline vehicles, and its meager “oil-to-electric” products lacked appeal, ultimately being left behind by the times.

On the other hand, its brand positioning has been doubly squeezed.

Long labeled as “cheap Volkswagen,” it could not break through brand barriers upwards, while facing siege from high cost-performance domestic brands downwards. More embarrassingly, Volkswagen’s main brand continues to lower prices, directly breaching Skoda’s cost-performance defense line—consumers discovered that for just a little more money, they could buy a “real Volkswagen,” so why would they choose this “substitute”? Skoda’s positioning as “affordable German” has become increasingly awkward, with its survival space severely compressed.

Known for its low prices, Skoda ultimately fell due to its cheapness. “Exchanging price for volume” caused a large number of dealers to withdraw, and its electrification transition plans were shelved, leading to a continuous decline in its competitive advantage. Caught in the middle with no way out, it ultimately had to turn and regretfully “withdraw.”

However, it is noteworthy that Skoda is not “a lost cause.”

By 2025, it is expected to achieve over 1 million deliveries globally, with an operating profit of 2.5 billion euros, even surpassing Audi and Porsche; in the Indian market, sales are expected to grow nearly 100% year-on-year, showing strong momentum. It simply did not win this “future transformation battle” in China.

04

Skoda’s farewell marks the end of an era, but also reflects the prosperity of the Chinese automotive market.

In 2025, China’s automotive production and sales are expected to reach 34.531 million and 34.4 million units respectively, a year-on-year growth of 10.4% and 9.4%, creating new historical highs for production and sales, and maintaining its position as the world’s number one for 17 consecutive years.

Among them, the annual production and sales of new energy vehicles are expected to reach 16.626 million and 16.49 million units respectively, with year-on-year growth of 29% and 28.2%, continuing to rank first in the world for 11 years in a row.

If an industry is close to doubling in growth every year, it is certainly not a coincidence; it is a force of the times, a power of trends.

In the Chinese automotive market of 2025, the penetration rate of new energy vehicles has surpassed half, and the market share of domestic brands has for the first time exceeded 60%. In this market environment, any brand that cannot keep pace with electrification and intelligentization may be eliminated.

Data shows that by 2025, there will be over 100 automotive brands in the Chinese market, and industry forecasts suggest that about one-third of brands may withdraw or become marginalized in the coming years. Skoda is not the first, nor will it be the last.

Prior to this, brands like Suzuki, Renault, and Jeep have also exited the market due to their inability to keep pace with the rhythm of the Chinese market.

Skoda’s farewell marks the end of an era, but it also serves as a warning: in the rapidly evolving Chinese market, if you do not move forward, you will fall back. Only by closely following trends and deeply cultivating innovation can one stand firm.

For every practitioner in the Chinese automotive market, this is also a wake-up call: the industry’s dramatic changes can happen at any moment, and only by continuously learning and improving oneself can one find their place amid the transformation.

Embodied Home: An information platform for embodied intelligence and AI robots

A wealth of information and precise interpretations can be found in the Sina Finance APP.