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VW's Skoda says might outsource production to meet demand

Reuters  |  BERLIN 

(Reuters) - Volkswagen's Czech brand said on Monday it might outsource some production to a as the division looks to respond to booming demand.

Already grappling with stretched capacity at its Czech plants, demand for its new sport-utility vehicles could lead production at to surge to 2 million cars by about 2025 from 1.2 million currently, the automaker has said.

VW's labour boss last week told that shifting some production to by 2019 will not solve bottlenecks at Skoda, which has passed to become the second-most profitable unit at group after sports-car brand

"There is a wide range of options to cover order peaks," said in an emailed response to a question from Reuters, adding that taking advantage of unused capacity within the multi-brand group 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."

Major carmakers including Germany's big three , and routinely use contract manufacturers such as or Finland's to outsource production, earning them greater flexibility while saving investments in their own facilities and resources.

Valmet is hiring up to 1,000 new staff this year to help build the Mercedes GLC sport-utility vehicle and the new A-Class compact.

Osterloh said a decision on how to boost Skoda's output will likely be reached by November when VW's supervisory board, of which he is a key member, is due to ratify the German group's rolling budget on capacity, technology and equipment.

(Reporting by Andreas Cremer; Editing by Matthew Mpoke Bigg)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, June 12 2018. 02:36 IST