SkodaAuto on expansion drive

To ramp up production to over 50,000 units in five years

SkodaAuto India, a marginal player in the one million units a year Indian car market, plans to ramp up its production from 8,000 units this year to over 50,000 units in less than five years.

The increased output will be used to meet export commitments to other Asia Pacific countries and incremental demand coming from new launches. In other words, this will be made a hub for the Asia Pacific region.

"We have quite some room for expansion in our Aurangabad facility. We will use that and add another shift here. If things go as planned we will be assembling 170/180 units a day in less than five years. This number will go up to 1,000 units a day eventually," said Karl-Guenter Buesching, chairman, SkodaAuto India.

In its bid to become a key player in India, the Czech car major will bet big on its soon-to-be-launched notchback Fabia. Since SkodaAuto does not have a small car in its international portfolio, it expects the Fabia to get it the critical mass it requires.

Skoda will also work on repositioning its luxury offering Superb which is currently priced at Rs 26 lakh. This will be done by moving it from completely built units imports to an assembly route. This is expected to take 6-8 months.

SkodaAuto's completely knocked down kits assembly facility in Aurangabad, which became operational in January this year, can assemble 15,000 cars per year in two shifts. The company will commence exports to Nepal, Bangladesh, Bhutan and Maldives either by 2005-end or early 2006.

It also has plans to export to Sri Lanka and Thailand, with which India has a free trade agreement. Later, SkodaAuto will embark on a more elaborate export strategy that will include the more mature markets in south-east Asia such as Malaysia, Indonesia, Singapore and the Philippines.

SkodaAuto, which began selling in India in 2001 through its semi-knocked down kits assembly facility also in Aurangabad, is yet to break even in India. Buesching assured that the company would be in the black by 2005 or at most 2006.

In the near future, SkodaAuto will launch the Fabia and the all-new Octavia II in 2005. With the Octavia, Octavia II, Superb and the Fabia, the company hopes to sell 10,000-12,000 units in 2005. It also plans to expand its dealer network from 36 to 45 in a year.