SHANGHAI -- Volkswagen AG will begin building the Skoda Octavia sedan in China in mid-2007 at its Shanghai Volkswagen joint venture, says Rudolf Fiala, China representative for Skoda Auto.
The introduction of the mid-sized sedan is part of VW's strategy to introduce multiple brands in China at different price points, as General Motors is doing. The Skoda will fill the role of the Chevrolet brand for Volkswagen.
"The purpose of this brand introduction is to offer a lower-priced brand than the Volkswagen-badged cars," says Yale Zhang, head of market forecaster CSM Asia's Shanghai office.
VW-brand cars in China range from the Gol subcompact, which sells for 73,000 yuan, or $8,800 at current exchange rates, to the $27,800 Passat sedan.
No price has been announced for the locally assembled Octavia.
Shanghai VW, a joint venture with Shanghai Automotive Industry Corp., will assemble the Octavia model now sold in Europe.
The Octavia shares the A-5 platform with the VW Golf and Bora sedans and the Caddy minivan.
The Golf, Bora and Caddy are assembled in China at FAW-VW, VW's joint venture with First Auto Works.
The Octavia will have a tough time competing on price initially because it will be assembled from kits, which carry the same 30 percent import tax rate as fully assembled vehicles. Automakers usually localize production as quickly as possible to avoid paying the high tax.
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