Skoda and VW to make budget car for Asia

March 11, 2007

Volkswagen AG, Europe’s largest car manufacturer, plans to produce a VW brand budget car to be sold in 2009 in Germany for under 8,000 euros, according to a statement made by the CEO Martin Winterkorn in an interview with German magazine  Automobilwoche.

http://www.forbes.com/business/feeds/afx/2007/03/11/afx3505391.html

The visionary Winterkorn identifies and refers to these markets as the interesting ‘future markets’, where price is the main factor.

Winterkorn, formerly the head of the successful luxury Audi Unit, became the new CEO of Volkswagen in January of this year, taking over the reins of power from Bernd Pischetsrieder. Winterkorn has his sights set firmly on revitalising the Volkswagen brand. He is already planning a modified version of the Golf hatchback to be released next year and a remake of other successful models. The Volkswagen brand group includes the Bentley, Skoda and Bugatti divisions.

Meanwhile, VW unit’s Skoda Auto BOD Chairman Detlef Wittig has also confirmed in a separate interview with the German magazine that Skoda envisages selling a budget car in developing countries such as Russia and India for approximately 6,000 to 7,000 euros. Skoda has foreshadowed building a cheaper smaller model for emerging markets in China, India and Russia. The blueprint is to develop three models of vehicles, European style Fabias, Octavias, Superbs and Roomsters, active lifestyle models Yeti and Joyster, and smaller cheaper cars for developing companies.

Skoda currently sells Octavia, Lauda and Superb models in the Indian market, and as other car companies such as Hyundai are raising their prices, Skoda has already slashed the prices of it’s cars in India prior to the introduction of the Fabia concept to the market. The Fabia will be far bigger than any hatchback available in India, and should prove extremely popular, upstaging other models.

Skoda has signed agreements for an assembly plant construction contract with the Russian Federation and the Kaluga district in Moscow in May 2006. Octavia and Fabia models will be produced at the new plant, which is the result of a joint venture between Skoda and the Volkswagen group. The new plant for the Octavia model is to be built in Kaluga, a city 160km southwest of Moscow city. Skoda plans to sell about 30,000 cars per year in Russia, after experiencing enormous increases in sales across Eastern Europe. The output at the plant is aimed to satisfy the need of young families in Russia who are not very affluent, but they also plan to sell new cars to middle class and corporate customers.

Skoda has several manufacturing and assembly plants including one in Sarajevo and India. Skoda Auto has also opened a new facility whose tasks include the preparation and shipping of unassembled vehicles for foreign based assembly plants. The facility is designed to supply Skoda assembly plants in the Ukraine, India, Bosnia & Herzegovina and Kazakhstan.

Skoda Auto is the leading automobile manufacturer in the Czech Republic, it’s origins dating back to the early 1890s, commencing with making bicycles, adding motorcyles in 1899 and cars in 1905. It is one of the four oldest car producers in the world. In 1991 it became a subsidiary of the Volkswagen group. The Skoda badge is taking the world by storm, and no longer bears the brunt of bad jokes. It has been voted Britain’s favourite car in a survey by Top Gear magazine, with the Octavia, Superb and Fabia all ranking in the top 10 cars for satisfaction, reliability, driving experience and cost.  Skoda has collected many awards in recent years including six in Europe for best car.

Skoda is celebrating a world premiere of the special edition new Fabia sports 4 door Hatchback S2000 with a 2 litre engine recently unveiled at the Geneva Motor Show. One thousand of the cars have been produced which feature individually numbered black leather seats, red callipers and racy blue metallic paint, a colour which is unpredecented in the history of the Fabia. The reference to S2000 is an allusion to the compliance with the new FIA Rally regulations, continuing the 100 year old motor sports tradition in Mlada Boleslav. The S2000 is pictured here

   skodarallyready.jpg

The premiere of the Fabia sports edition and hatchback is aimed at boosting it’s market share in the European Union countries like Italy and France, having experienced growth in countries such as Ireland, Belgium and Denmark.

Fabia is now five years old, having first being launched at the turn of the millenium, and has since been re-invented to keep pace with design and technological innovation.

The Skoda brand has come a long way. Sitting beside the motor sports model, was the elegant and equally sleek shaped Fabia concept car, pictured below, with a striking black body and elegant silver painted roof and door mirror caps. A white painted roof will be available for the mass produced car.

fabiablack.jpg

The new Fabia, part of the latest generation of the superminis, is to be officially released in May this year, and is predicted to sell for 8,000 pounds.

 It is intended to be targeted at the younger generation. Buyers can expect  the design concepts will be borrowed from the black and silver hatch which premiered at the Geneva auto show. It’s engine is designed to reduce CO2 emissions, emitting a maximum of 120g/km. It comes with one of four engines, three petrol and 2 diesels, ranging from 44 to 77 kW (65-105hp).

Personalisation is said to be a critical plank in the marketing strategy for the car. Buyers will be given the option of having a huge picture of their choice placed onto the roof of their car, whether it be a photo of their loved ones or the British flag. Extending the customisation theme further, buyers will also be able to stipulate different colours for the dashboard and interior trim.

Skoda boasts one of the best records for plant productivity and quality in the VW group. The year 2006 was a milestone for Skoda Auto in that it managed to produce over 500,000 cars in one year for the first time in their history. The division has aspirations to sell 600,000 units in 2007, and has implemented measures to raise production capacity at it’s Czech plant. Skoda holdings has had an extraordinarily successful year, almost doubling it’s net profits in 2006.

The company is also set to target the Australian market, a market where no Skoda cars have yet been sold.  Commencing in 2008 Skoda will enter the market with it’s Octavia model, followed closely by the Roomster. It is presently concentrating on establishing it’s Australian sales network with it’s operations initially being confined to around 30 dealers who have the capacity to sell Skodas in addition to Volkswagens. Eventually Skodas will be sold through Skodas own dealers.

The Skoda has the elusive X factor, and amongst celebrities who choose Skoda as their choice of vehicle are supermodel Liberty Ross, a high paid catwalk queen. Catherine Zeta Jones and Michael Douglas have also behind the wheel of a Skoda, arguably one of the richest celebrity couples.

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