Forecasts on Fabia raised by Volkswagen Skoda

The Volkswagen AG’s unit in Czech, Skoda Auto AS, increased its full-year forecast on sales. This is because the demand for the Roomster all-purpose vehicle and Fabia small car were up to a high. “Skoda estimates deliveries will increase about 13 percent to 620,000 units from 549,667 units in 2006,” said Chief Executive Officer Detlef Wittig during an interview at the headquarters in Skoda’s Mlada Boleslav, Czech Republic.

Only in February this year that Wittig made a forecast that sales will increase by up to 9.1 percent to 600,000. The six-month sales of the automaker made an increase of up to 15 percent from a year earlier to 310,000 vehicles as reported by Wittig, while their revenue increased between 7 and 8 percent.

The growth of profit “will be a little higher” than the sales increase as they said because Skoda has cut the production and the costs for material. The medium-term global target increase for the sales of Skoda of Wittig is 45 percent to 800,000 vehicles a year since the division expands production worldwide.

The Volkswagen’s second most profitable unit after the Audi luxury brand is planning on increasing their 2007 sales through their new version of their best-selling Fabia model. This model came to market in March and the Roomster was introduced in 2006. “The new Fabia and the Roomster are doing well, which is a good reassurance for the future,” Wittig said. The Czech division’s 2006 profit soared 40 per cent to a record 11.1 billion koruna ($520 million) as the Roomster appealed to buyers and thus the productivity improved.

The sales increased to 8.7 percent to 203.7 billion koruna. Skoda is investing a total of 350 euros or $471 million this year, and most of the money will be used for the expanding production capacity at the three existing Czech plants. However, they have no plans on adding a factory on th market even though they are experiencing a “tight labor market.”A fourth plant is absolutely out of discussion,” Wittig said. “The Czech labor market would not give us an opportunity to do that,” he added.

It was said by the government that their unemployment rate fell to 6.4 percent in May, which would be the lowest since 2004, the time Czech Republic joined the European union. Skoda also had to compete for workers as a joint venture was made between Toyota Motor Corporation and PSA Peugeot Citroen and other automakers expanded.

Wittig’s objective is to introduce a new model every year and that includes a new Sports Utility Vehicle called the Yeti, which is scheduled to come out in 2009. Also, they plan to release a Combi Fabia in 2008, which will be manufactured at the main plant in Mlada Boleslav.

Skoda alo plans on expanding in emerging countries like Russia, India, and China. This year’s division began on selling the Octavia mid-size sedan produced at the Volkswagen plant in China, and they will also manufacture the Fabia and Superb, its most expensive vehicle.

The joint Volkswagen and Skoda factory will help the automaker in avoiding a 25 percent tax on imported vehicles. “Skoda now has 50 exclusive dealerships in China and by the end of the year will have 80 outlets,” Wittig said. “Skoda has received orders in the last month for about 10,000 cars in China and expects to sell as many as 30,000 vehicles there this year,” he added.

The first Octavia in Russia will be assembled from kits staring October or November with the full production beginning in 2009. “The major growth rate in the future will be in the emerging markets, in Russia, India, and China,” Wittig said.

The production for those cars “will be done in those markets.” The division in March began selling the first complete remake of the Fabia since its introduction more than seven years ago. 1.6 million units of Fabias were already sold by Skoda since its debut in 1999.