PRAGUE -- Skoda's presence in India opens the world's second most populated country to sister brands such as Audi and lets parent Volkswagen focus on China, the world's hottest auto market.
"Skoda got the task of developing the Indian market because VW is more concentrated on the Chinese market," said Skoda spokesman Jaroslav Cerny.
VW is China's market leader with a 33 percent share. The country accounts for as much as 70 percent of VW's worldwide operating profit, according to estimates by Goldman Sachs.
In addition, the German automaker sold more VW and Audi units in China last year, 697,961, than it did in its home market, 519,500, and VW is investing E6 billion in new and expanded factories at its joint ventures in China.
Skoda is the only VW group company that builds cars in India. The country experienced a 16.8 percent increase in vehicle sales to 1,053,028 units last year, said Lauren Lacks, forecast analyst at CSM Worldwide. During the same period, sales in China jumped 31 percent to 4,241,923.
Skoda entered the Indian market in 1991 by using semiknockdown production. It started complete knockdown production of the upper-medium Octavia in Aurangabad in August and produced 1,641 units of the car last year. Skoda will move into its own greenfield facility in the same town next month.
India to get Superb
Skoda hopes the new plant will help it increase its share of the upper-medium segment.
"Already there are more than 10,000 Octavias on Indian roads," said Imran Hassen, managing director of Skoda India. "We hope to add another 8,000 cars in 2004."
Skoda sold 5,001 vehicles in 2003, a slight drop from the 5,084 units it sold in 2002, according to data from J.D. Power-LMC.
Skoda India sells two versions of the upper-medium Octavia, one equipped with a 2.0-liter gasoline engine, the other with a 1.9-liter diesel engine.
In March, India will get a luxury version of the Octavia and the brand's top model, the Superb, which will compete against the Toyota Camry, the Opel Vectra and the Mercedes-Benz C class.
Audi, which is also a VW subsidiary, plans to start selling its two-seat TT Coupe in India this quarter. Audi spokesman Jürgen de Graeve said the German luxury-car maker also would like to sell the A4 and A6 in India. He said Audi wants to set up a small network of Indian dealers who will import the cars from Germany.
Audi assembly in India
Press reports show that, depending on the success of the models, Audi may set up its own assembly in India or produce cars at Skoda's plant.
High import tariffs are forcing non-Indian automakers to set up production in the country. DaimlerChrysler, Fiat, Ford, General Motors, Honda, Hyundai and Toyota already have production facilities in India. Hyundai is the production and sales leader among non-Indian automakers. The Korean company builds the Accent, Santro and Sonota at its plant in Chennai. Hyundai produced 145,137 cars and sold 118,143 units in India in 2003, up from 108,036 and 102,578 in 2002, respectively.
Among German manufacturers, DaimlerChrysler is the leader in India. It produces the Mercedes-Benz C, E and S class in Pune. The Stuttgart-based company built 1,424 cars at the plant in 2003 and had sales of 1,578 units that year, up from 1,161 and 1,024 in 2002, respectively.
BMW wants to start a small-scale factory in India. It is looking for a partner for complete knockdown kit assembly to produce about 2,000 units of the 3- and 5-series.
Jens Meiners contributed