Skoda Auto, the Czech unit of Volkswagen Group, said on Dec 10 that it will begin local production of its compact SUV Yeti in early 2013 at the joint venture between Volkswagen and Shanghai Automotive Industry Corp.
Winfried Vahland, board chairman of Skoda, made the announcement during his trip to China last week. The final agreement was inked by Skoda and Shanghai Volkswagen Automotive Co Ltd one day before the press conference.
With local production of the Yeti, the brand will join the competition in the "big segment of SUVs" in China, a move that will "enhance the volume, image and brand awareness of Skoda heavily", Vahland said.
Skoda began cooperation with Shanghai Volkswagen five years ago and introduced its first locally built model, the compact Octavia, in 2007. A year later the subcompact Fabia followed and the mid-sized Superb rolled off the production line in 2009.
"We want to increase our share in the Chinese market and one way to increase share is to increase our product range," Vahland said, noting that the Yeti "will not be the end" and "more products will come".
Skoda's share of China's entire auto market was 1.4 percent last year, a figure the company plans to more than double by 2015, he said.
Zhang Hailiang, managing director of Shanghai Volkswagen, told China Daily that before the Yeti hits the market, the joint venture will roll out several other upgraded and all-new products in 2011 and 2012, but did not specify which models they will be.
In the first 11 months this year, Skoda's China sales surged 56 percent to about 167,000 cars, with its compact Octavia enjoying a stable monthly delivery of over 10,000, according to Skoda.
Its dealer outlets across the country now have increased to 302.
"China will be the biggest market for Skoda worldwide in 2010," Vahland said, with about one-fifth of the brand's global sales.
"China and Shanghai Volkswagen will be the cornerstone for our future Skoda strategy."
The biggest issue Skoda now faces in the fast-developing market in China is to "manage growth in a good way", he added.
"Skoda wants to go faster than the market - we have to build up capacity, dealerships, new products," Vahland said. "We have to do it always (in the way that) satisfies the customer, bringing them the quality we have promised."
Before he was appointed board chairman of Skoda in September, Vahland was president and CEO of Volkswagen Group China for five years, when he consolidated the automaker's lead in the Chinese market through aggressive introduction of new products.
Last week's briefing was the first time Vahland returned to China and talked with the press after assuming his new position.
"I'm missing China," he laughed, promising he would come frequently to support the development of Skoda. Vahland said Skoda will also focus on markets in Russia and India.
The century-old Czech brand aims to be more global and double its annual sales worldwide to more than 1.5 million units in the next decade.