Branding Skoda, from Bollywood to Shanghai

The carmaker Skoda Auto announced this week that it would begin producing its Octavia brand in China, starting with its luxury sedan version in 2007 and later estate cars. Just over 2,300 Octavias were sold in China last year but Skoda plans to produce some 40,000 vehicles at its Shanghai plant within just a couple of years. A Czech brand for more than a century, Skoda is wholly owned by German manufacturer Volkswagen AG, which already makes cars in China, and has made inroads into India. Brian Kenety recently spoke with the Central European correspondent for "Automotive News Europe", Lyle Frink, about the significance of the move.

Lyle Frink: "Skoda announced this week that they are going to be making Ocativas in Shanghai, China as of 2007, and this is the first full-scale production of cars outside the country. It's interesting because, number one, it's the first production; it also makes Skoda a brand in the world's largest and fastest moving car market."

Radio Prague: The production in China will be for purchase in China - is that the idea?

"Initially, they said, it would be for the Chinese market. China does have the goal of exporting cars. So, theoretically, Skodas could travel from China to other places in the globe.

RP: You were saying earlier that the Volkswagen Group, VW brand, and the owner of Skoda, has a 50 percent share in China - and not just of imports, but of all cars?

"Right, because in China you basically have to make there to sell there. Ans so they have two factories, I believe. And they are making a Santana brand, which is more of a local car, and a Shanghai Passat, which is very similar to the Skoda Superb - and so the Octavia will be positioned between these two cars. The Chinese people, I guess, prefer three-box sedans over combis.

RP: But it will be an 'Octavia'?

"It will be an Octavia, the new Octavia, and it will be branded as a Skoda. So it's not just an Octavia body with a VW nameplate pasted on the front."

RP: Now, roughly two out of every five people on the planet is either Chinese or Indian - and Skoda is also making inroads into India.

"Correct. Skoda is basically the lead brand for the VW Group within India. However, with India they are going in as kits, and they are using cars that are essentially manufactured in Mlada Boleslav and reassembling them in India. In China, they will be making the complete cars.

RP: And how is Skoda being branded, or marketed, rather, in India, against the Volkswagen?

"In India, Skoda is marketed as an upscale brand for people who want to be seen: they've had Skoda Superbs, and, I believe Octavias, placed in a few Indian action flicks - from 'Bollywood' - so they are definitely aiming at the top end of the market: it is not an economy car."

"With China, you could make a comparison to Pilsner Urquell beer and it being owned by SAB Miller - and that's taking the brand outside of the country, but not production; with Skoda, they are part of the VW group, and with the India move, its just like exporting beer but just bottling it in a different site. With China though, they will be making the complete car in China and basically just taking the name out from the Czech Republic.

"The indirect influence would be that it increases the visibility of the Skoda brand name--throughout the globe--and that would potentially increase demand for the vehicles."