Skoda heads for the Chinese market

Skoda Octavia

The days when Czech-made Skoda cars used to be the butt of jokes are long behind us, and today Skoda is one of the most successful divisions of the Volkswagen Group. This was borne out this week at the Beijing Motor Show, as David Vaughan now reports.

In Beijing Volkswagen announced its new strategy for China, currently one of the most attractive and competitive emerging markets. And it hopes to conquer the market with none other than the Skoda Octavia. Up to now Volkswagen has focused on the far smaller Polo, but it has found to its cost that what the Chinese want is a large, cheap and straightforward model, rather than a small and complex car. In this respect the Octavia fits the bill perfectly.

VW has been losing out on Chinese markets against General Motors, Toyota and Honda, and VW chief executive, Bernd Pischetsrieder, acknowledged that the decision to focus on the Polo had been a serious mistake.

But now Volkswagen wants to double the capacity of its Chinese plants, and Skoda has confirmed that plans are being considered to assemble the Octavia directly in China.

But marketing the Octavia poses something of a problem. The Volkswagen brand is well-known and respected in China, while Skoda remains virtually unknown. VW management is considering a simple solution. The Czech-designed Octavia will go onto the Chinese market with a simple VW label. This is nothing unusual in the motor industry, where on the British market, for example, the Opel Astra has never been known as anything other than a Vauxhall.

China will be Skoda's second major foray onto the Asian market. With some success it is already beginning to export to India.

But success isn't guaranteed. In order to succeed on the competitive Chinese market, the Octavia will have to be sold at a rock-bottom price, leaving little space for quick returns.