Skoda plans to boost margins

Mlada Boleslav, Czech Republic. Skoda Auto boss Detlef Wittig said he wants to improve profitability in the long term at the Czech-based Volkswagen subsidiary. "With a return on sales of 3.2 percent we have only achieved half of what a company with a future needs to finance its investments," Wittig said in an interview.

To "stand one's ground in the world league of car manufacturers" Skoda must expand its model range in the medium-term and increase unit sales in the future.

Wittig says that Skoda plans to increase its annual production to "about 600,000 units by 2008-2009." It currently builds about 450,000 units.

The Roomster compact van that's due in mid 2006 will play a big part in this. Wittig said he expects annual sales of up to 100,000 units.

As part of a so-called "area strategy," Skoda sales and marketing executives are seeking gaps in global markets that the brand could fill. Exports to markets where Skoda has no precense, like Taiwan and Australia, are possibile.

Skoda also wants to intensify technical cooperation within the Volkswagen group.

"We could bring in even more of our cost advantages for the good of the group," Wittig said.

Skoda will take over the development of innovative roof and hatchback systems for several models that VW wants to market in China, for example.

"We no longer only take group know how," he said. "We give more and more back to Volkswagen."

The Skoda boss said that Skoda Germany will not mirror the kind of special financing deals offered in Poland, where Skoda buyers pay no interest on car loans the first year.

Also, Wittig said the prospects for the Yeti SUV concept car to go into series production are good. Skoda presented the Yeti at the Geneva auto show.

"We will show the concept at two or three more places before making a decision," Wittig said.

If approved, the program would likely include such details as a bicycle rack integrated in the rear hatch.

"Skoda could distinguish itself further with such clever solutions," said Harald Ludanek, Skoda's head of development.

For the Yeti concept to be financially viable, Skoda believes it would need to share 30 to 40 percent of its components with existing platforms.

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