Skoda banks on new models for sales revival in China

Article by Christian Andrei, on July 13, 2014

Skoda will bank on new models as well as dealership makeovers to stop its bleeding in China and finally post sales growth in the country. Skoda is expecting its new Rapid Spaceback compact wagon and next-generation Octavia compact sedan as well as a new version of its Yeti small SUV to boost its sales by over 10 percent by the end of 2014, Skoda China President Andreas Hafemann told Bloomberg in an interview.

Hafemann remarked that the products will allow Skoda to expand and enter into segments which the carmaker was not positioned in the past. Once the Czech carmaker achieve its sales target, it would mark a turnaround for Skoda in China, where it was one of two volume foreign brands to suffer a drop in deliveries in 2013, according to researcher IHS Automotive.

Skoda posted a 4-percent drop in sales in 2013 to 227,000 units in a market where consumers purchased 16 percent more passenger vehicles than a year ago. In the first five months of 2014, Skoda logged an 8-percent rise in first five months of 2014, while the Chinese passenger-vehicle market grew 11 percent.

Skoda is targeting to more than double its sales in China by 2018, in line with parent VW Group's aim of surpassing Toyota Motor Corp. as the largest carmaker in the world by the same year.

However, Skoda’s growth should come without cannibalizing sales of the VW brand, which according to IHS Automotive enjoys the perceived prestige of German engineering. The VW brand also offers models at comparable or slightly higher prices.

For instance, the Skoda Octavia sedan has a base tag of CHY119,900 ($19,000), while the VW Lavida sedan carries a starting price of CHY107,800. Lin Huaibin, an analyst for IHS Automotive, remarked that China consumers believe in German brands, noting that Skoda “hardly is one."

Hafemann said that buyers would settle for VW models against Skoda units if offered at more or less the same price. Hafemann remarked that Skoda highlights the value of its products, like more legroom and headroom, easy-to-access trunks and distinctive design features. He added that Skoda’s European heritage is likewise an advantage for the brand.

Topics: skoda, sales, china

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