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Skoda to launch Octavia in Sept

Czech carmaker Skoda Auto, a unit of Germany's Volkswagen group, plans to launch its mid-sized Octavia model in India in September and will invest up to $50 million in the project, a trade body said on Monday.

Skoda's Indian subsidiary will begin by launching the Octavia diesel by importing completely knocked-down kits for assembly in India and later roll out a 1,984-cc petrol version, the Indo-German Export Promotion Project said in a statement.

The Octavia will be positioned in India's D-segment, made up of cars priced from Rs 1.1-1.8 million ($23,400-$38,290), between the Opel Astra and the Mercedes C class.

Skoda expects to sell 500 to 600 of these cars in 2001 and 1,200 during the first year of full manufacturing operations.

Industry officials do not forsee India's D-segment being any larger than 5,000 to 7,000 cars.

The Volkswagen Group plans to invest $50 million on behalf of the Czech company in the first round at its plant in Aurangabad in Maharashtra, the statement added.

The plant will have the capacity to assemble 20 cars a day.

"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 said.

Several global auto firms have recently announced plans to launch larger mid-sized saloons in India taking advantage of a new liberalised automobile policy announced in April that allows the import of cars after paying duty.

The Octavia will compete with the Accord from Honda, the Mondeo from Ford, the Sonata from Hyundai and the Magnus, Nubira II and Lanos II models from Daewoo.

Skoda's entry into India will help boost India's auto parts industry, the statement said.

Imports being a crucial component of the project would have involved a foreign exchange outlay of about $417 million in five years but Skoda has proposed an export obligation of $425 million during the same period, it said.

Skoda plans to divest eight to 10 per cent of its equity in the Indian subsidiary to local financial institutions over the next two-to-four four years.

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