Czech car maker Skoda Auto, part of the Volkswagen Group of Germany, will hit the Indian market by launching its premium car -- Octavia -- in September 2001. Octavia is expected to be priced at Rs 11 lakh.
Skoda will also undertake studies to launch smaller cars such as the Fabia. According to a statement issued by the Indo-German Export Promotion Project (IGEP), the Volkswagen Group "is going to invest $50 million on behalf of its Czech daughter Skoda in the first round for the new company in Aurangabad."
Initially, Skoda plans to launch Octavia in a 1900cc diesel version and then roll out a 1984cc petrol version, depending on market demand.
"The Indian subsidiary will import cars as completely knocked down (CKD) kits from its parent company. Instead of immediately starting comprehensive manufacturing operations, Skoda will study the market for other models, mainly for the smaller Fabia in various versions," the statement read.
With a production capacity of around 20 cars a day, the company intends to sell around 500-600 units in 2001. Skoda, which has invested over $6 million at its greenfield site in Aurangabad, had earlier decided to hold back future investments till all business conditions are clarified.
As per the statement, Octavia will be the first car to be supplied on a CKD basis and will be placed in the segment between General Motors' Opel Astra and Daimler-Chrysler's Mercedes-Benz C-class. Initially, Skoda will launch the Octavia in select cities.
As per the memorandum of understanding signed with the government, Skoda would have an export obligation of $425 million in the first five years in order to neutralise its forex outflow of about $417 million. The company also plans to divest 8-10 per cent of its equity to domestic financial institutions over two to four years, the statement added.
