Skodas 07 Forecasted Fabia Sales Increases

By: Rain Stockton

As demand for the new Fabia small car and Roomster all-purpose vehicle booms, Skoda Auto AS, Volkswagen AG's Czech unit, increased its full-year sales forecast.

Chief Executive Officer Detlef Wittig said in an interview at Skoda's Mlada Boleslav, Czech Republic, headquarters in June 25 that Skoda estimates deliveries will increase almost 13 percent with 620,000 vehicles from 549,667 units in 2006.

In February, Wittig forecasted a 9.1 percent increase to 600,000 vehicles. The CEO said the carmaker's six-month sales have earned additional 15 per cent from a year earlier to 310,000 vehicles, while revenue also increased by between 7 per cent and 8 per cent.

Because Skoda has cut production and material costs, profit growth will be a little higher than the sales increase. And as the division extends its production worldwide, Wittig has a medium-term global target of increasing Skoda's sales 45 per cent to 800,000 vehicles a year.

Volkswagen's second most- profitable unit after the Audi luxury brand, Skoda plans to increase 2007 sales with a new version of its best-selling Fabia model, which came to market in March, and the Roomster, introduced last year.

Located 60 kilometers (37 miles) northeast of Prague, the unit holds a crucial role in the fortunes of its Wolfsburg, Germany-based parent company, which is Europe's biggest carmaker, as well as its homeland. Skoda targets to sell 100,000 new Fabias and 70,000 Roomsters in this year.

Wittig assured that the new Fabia and the Roomster are doing well which is a good sign of reassurance for the future 40% Profit Growth and the targeted sales. As the Roomster attracted buyers and attained improved productivity, the Czech division's 2006 profit rushed 40 per cent to a record of 11.1 billion koruna ($520 million).

With 203.7 billion koruna, sales climbed 8.7 per cent. For 2007, Wittig said that Skoda is investing a total 350 million euros ($471 million) with most of the money allotted for the expansion of production capacity at the three existing Czech plants.

Skoda has no plans of adding a factory in the country, where it is facing a tight labor market. The CEO continued that Czech labor market would not give them the opportunity to build the fourth plant.

The governemnet said in June 8 that the country's unemployment rate in May dropped 6.4 per cent - the lowest since at least 2004, when the Czech Republic joined the European Union.

Also facing competition for workers is competing for Workers Skoda as other carmakers, such as the joint venture between Toyota Motor Corp and PSA Peugeot Citroen, broadens in the country. So in order to help operate its Czech plants, Skoda has had to hire foreign workers.

Every year, Wittig has set a goal of introducing a new model including a new sport-utility vehicle called the Yeti scheduled to come in the showrooms in 2009. Wittig said Skoda plans to bring a Fabia Combi in 2008 into the market. It will be made at the main plant in Mlada Boleslav.

In March, the division began selling the first complete remake of the Fabia equipped with quality . This was the restart since the car's introduction more than seven years ago. And Skoda has sold more than 1.6 million Fabias since the model entered the market in 1999.

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