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Shanghai Volkswagen sees promise in Skoda

BEIJING, July 18 -- Sino-German car venture Shanghai Volkswagen Automobile Co is looking to Skoda, its newly introduced Czech brand, to help it boost sales amid heated competition in the world's second-biggest vehicle market.

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

Although the venture didn't reveal how many Skoda cars it hopes to sell by then, analysts said it is a bold plan as the Czech brand is a new entrant in China.

Shanghai Volkswagen said it aims to sell more than 30,000 Skoda Octavia compact sedans this year as part of its drive to move a total of over 400,000 cars, up from 352,000 units last year. The Octavia, Skoda's first China-made model, was put on sale on June 6.

The venture's first-half sales jumped by 23.1 percent to 213,735 units, including 3,000 Octavias, ranking it as the No 3 passenger car producer in China after Volkswagen's other tie-up with FAW Corp and General Motors' venture with SAIC.

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

Shanghai Volkswagen said "the introduction of Skoda is the start of our multi-brand strategy and will expand our lineup to satisfy growing customer demand".

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

Attempting to dispel concerns that Skoda will cannibalize Volkswagen brand sales in China, the company stressed that Skoda cars would not go head-to-head with Volkswagen models as the Czech marque has its own market position.

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

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

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

From January to June this year, the group's China sales jumped by 24.6 percent to 431,369 cars.

Overall sales of China-made passenger cars hit 2.55 million units in the same period, up 26 percent, according to industry data.

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

(Source: China Daily)
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