It is no secret that the largest automobile manufacturer in the Czech Republic, Skoda Auto, has in the past been a laughing stock in the automotive world. But things are finally turning for the automaker and it has now become a profit-making force for its owner Volkswagen.
The largest automaker in the Czech Republic also plans to open new markets in China, India and Russia. Volkswagen bought Skoda Auto in 1991 and became one of the forces behind the latter’s global force. And as part of the largest car manufacturer in Europe, Skoda Auto uses quality Volkswagen car parts for its production, such as the popular Volkswagen spark plug wires.
Skoda Auto was able to record net profits during the last week of 2006 totaling 11,060 million crowns or 392 million euros (515 million dollars). He had a 40% increase over his earnings from the previous year.
Skoda Auto production also increased by 12.6 percent or 556,347 units with successful deliveries of up to 11.7 percent, resulting in an overall sales increase of 8.7 percent to 203.7 thousand. million crowns. For this year, Europe’s largest automaker, owner of Volkswagen, Skoda, expects to produce more than 600,000 cars.
According to Marc-Rene Tonn, an analyst at the German bank MM Warburg and Co., “Skoda is an extremely profitable part of the Volkswagen Group.” He also emphasized that about one in 10 Volkswagen Group cars are produced in the Czech Republic, especially those sold in 2005. This was seconded by Stephen Pope, a London-based analyst at financial services group Cantor Fitzgerald Europe, ” Volkswagen will rely heavily on Audi and Skoda during this current period. ” As it said that Europe’s largest automaker is currently struggling with an aging model range and needs new launches to revive it. “The completely new image of Skoda has changed. It is no longer taken as a joke and now it is seen as a pure derivative of Volkswagen, but at a much more reasonable price.”
Pope also added that this simply shows the remarkable development that Skoda Auto has achieved under Volkswagen’s management for the past 15 years as part of the VW Group. He also praises Volkswagen for being firm in its decision not to scrap the Skoda brand despite the brand’s not-so-good image in Western Europe (DaimlerChrysler could use some advice from Volkswagen).
The fact that the Skoda becomes one of Volkswagen’s leading, reliable, reasonably priced automakers only proves the effective management style that Europe’s largest automaker has. And today, Volkswagen is leading Skoda to become its low-cost spearhead into the booming economies of China, India and Russia without hurting as it tries to target a more prestigious market.
Pope also said that “Skoda will be designated as the entry-level car with the premium share of the market remaining for Volkswagen.”
Skoda boss Detlef Wittig announced last week the company’s goal of producing low-cost cars for the Asian market, also mentioning that the company plans to open markets in India, Russia and China. The low-cost Fabia and high-end Superb are planned to be produced for China in partnership with Shanghai Volkswagen. Also, production launches of the mid-range Octavia model are scheduled for China this year.
The Czech automaker already has car assembly and production projects in Ukraine, Russia, Kazakhstan, Bosnia and India. Current models lined up for production include the mid-range Roomster that will complete the current four-model lineup and the three-door sports car called the Skoda Joyster that is designed for young buyers.