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Shanghai Volkswagen is to take over the import rights to Czech car maker Skoda from Shenzhen-based C&F Investment, in a bid to strengthen its hold on the family car market.

 

Although Shanghai Volkswagen is planning to make the Skoda Octavia model in China next year, the company still needs to import other Skoda models to boost its waning market share in the highly competitive segment, flushed with players from Japan and South Korea.

 

Alex Schneider, project director for Skoda with Shanghai Volkswagen, said the company expects to secure the right to import Skodas in 2007, while starting to produce the Octavia in 2006.

 

Schneider said Shanghai Volkswagen is in the final stage of talks with C&F Investment, who has held Skoda's import rights since 1999.

 

According to a report from C&F Investment, it sold 1,200 Skoda sedans in China last year.

 

"We are also waiting for the central government's approval to import Skoda models next year," said Schneider.

 

If the proposed transaction goes through, Shanghai Volkswagen will become the second auto joint-venture after Shanghai GM to secure an import license. Shanghai GM is authorized to import Cadillac and Saab cars into China.

 

Analysts said Shanghai Volkswagen's move highlights its shift in marketing, as its market share is increasing eroded by Shanghai GM, Honda and Chang An Ford, and its major models, including the Santana and Polo, become gradually less competitive in the market.

 

"Skoda may help Shanghai Volkswagen widen its model range and lessen its dependence on the aging Polo and Santana," said Todd Wang, an analyst with Shanghai-based Autotech Consulting Co Ltd.

 

Miao Yu, an official with Shanghai Volkswagen's communications department, said yesterday the company is building sales network for Skoda models.

 

"So far we have found 25 agents around the country," said Miao, who added that over 500 sales agents have applied to sell Skodas, indicating the likelihood of the brand performing strongly in China.

 

Shanghai Volkswagen is planning to build 80 sales stores in China by the end of this year.

 

"It reflects Shanghai Volkswagen's determination to market Skoda in China, and the company obviously anticipates Skoda becoming one of its major brands," said Wang.

 

Production of the Skoda Octavia will begin next year, followed by the Fabia and Superb models.

 

(China Daily July 18, 2006)