Skoda to Help Boost Shanghai Volkswagen Sales

By: Rain Stockton

China View reports Sino-German car venture Shanghai Volkswagen Automobile Co is seeing Skoda, its newly launched Czech brand, to help it lift sales in the middle of heated competition in the second-biggest vehicle market in the world.

The report says the 50-50 joint venture of SAIC Motor Corp and Volkswagen AG told China Daily that it is expecting Skoda, wholly owned by the German carmaker, to get 2.5-3 percent of China's passenger car market by 2010.

Although the venture did not tell how many Skoda cars it expects to sell by then, analysts said that it is a brave plan because the Czech brand is a new entrant in China.

Shanghai Volkswagen claimed that it aims to sell more than 30,000 Skoda Octavia compact sedans this year. This is in lieu of its desire to move a total of more than 400,000 cars, up from 352,000 units last year. The Octavia, Skoda's first China-made model, started its sale on June 6.

The venture's sales for January through June were increased by 23.1 percent to 213,735 units. These included 3,000 Octavias, ranking it as the No. 3 passenger car producer all over China after Volkswagen's other association with FAW Corp and General Motors' emprise with SAIC.

The director of Greater China Vehicle Forecasts for US consultancy CSM Worldwide (Shanghai) Corp by the name of Yale Zhang predicted that passenger car sales in China, which is comprised by sedans, sport utility vehicles and multi-purpose vehicles, will increase to 7.2 million units in 2010 from 5 million that is expected to be sold this year.

Shanghai Volkswagen said the launch of Skoda is the beginning of their multi-brand strategy and will expand their lineup to meet increasing customer demand.

The venture, which makes Volkswagen's Santana, Passat, Polo, Gol and Touran, plans to present a new Skoda model yearly in the coming years, including the subcompact Fabia and mid-range Superb.

The company emphasized Skoda cars would not go head-to-head with Volkswagen models as the Czech brand has its own market position. This is in attempt to cast out the issue on Skoda's cannibalization of Volkswagen brand sales in China.

The venture said Skoda targets buyers who are "intelligent, steady-going and have a taste for life and inner-strength", like the lawyers, doctors, teachers, senior civil servants, and other professionals.

The firm claimed at the end of this year it will have 110 Skoda dealerships, up from 80 now.

Winfried Vahland, CEO of Volkswagen Group China, said last September that he expected Skoda to be a new foundation along with the Volkswagen and Audi brands to strongly establish the German group's leadership in China's car market.

The group's China sales hiked by 24.6 percent to 431,369 cars during the first half of the year.

Based on industry data, sales of China-made passenger cars are 2.55 million units in the same period, up 26 percent.

The German carmaker's emprise with FAW is producing Volkswagen and Audi vehicles.

Volkswagen is also the maker of quality .

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