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The origins of Škoda go back to the early 1890s where, like many long-established car manufacturers, the company started out with the manufacture of bicycles. It was 1894, and 26-year old Václav Klement, who was a bookseller by trade in Mladá Boleslav, in today's Czech Republic, which was then part of Austria-Hungary, was unable to obtain the right spare parts to repair his German bicycle. Klement returned his bicycle to the manufacturers, Seidel and Naumann, with a letter, in Czech, asking for them to carry out repairs, only to receive a reply, in German, stating: "If you would like an answer to your inquiry, you should try writing in a language we can understand". A disgusted Klement, despite not having any previous technical experience, then decided to start his own bicycle repair shop, which he and Václav Laurin opened in 1895 in Mladá Boleslav. Before going into business partnership with Klement, Laurin was an already established bicycle manufacturer from the nearby town of Turnov.

In 1898, after moving to their newly-built factory, the pair bought a Werner "motorcyclette", which was produced by French manufacturer Werner Brothers. Laurin & Klement's first motorcyclette (which was powered by an engine mounted on the handlebars driving the front wheels) proved dangerous and unreliable — an early incident on it cost Laurin a front tooth. To design a safer machine with its structure around the engine, the pair wrote to German ignition specialist Robert Bosch for advice on a different electromagnetic system. The pair's new Slavia motorcycle made its debut in 1899.

In 1900, when the company had a workforce of 32, Slavia exports began, with 150 machines shipped to London for the Hewtson firm. Shortly afterwards, the press credited them as makers of the first motorcycle.[citation needed]

The first model, Voiturette A, was a success and the company was established both within Austria-Hungary and internationally. By 1905 cars were being produced by the firm. During the First World War Škoda was engaged in war production.

After WWI it began producing trucks, but in 1924, after running into problems and being hit by a fire, the company sought a partner. As a result it merged with Škoda Works, the biggest industrial enterprise in Czechoslovakia. Most later production was under the Škoda name. After a decline during the economic depression, Škoda was again successful with models such as the Popular in the late 1930s.

During the World War II Occupation of Czechoslovakia, the Škoda works was turned into part of Hermann Göring Werke serving the German World War II effort

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