Skoda Plans To Go It Alone, Launch Felicia By 99

Czech-based car maker Skoda Automobilova, a Volkswagen group company, has decided to go ahead with its plan to launch the Felicia model in the Indian market in 1999, followed by the Octavia, in spite of the breakdown of talks with Delhi-based Eicher group.

Skoda Automobilova is pushing through its plans to establish a greenfield manufacturing facility in the country and expects to finalise the location of the proposed plant by September this year.

It is weighing the option of entering India on its own through a wholly-owned subsidiary to set up the manufacturing base, while looking for a marketing tie-up with an Indian partner.

Volkswagen is of course interested in and has confidence in India. We are looking at various sites like Pune, Chennai and Gujarat, and will finalise the location in a month. Our plans are on track and the launch will be as scheduled in 1999, Imran Hassan, in-charge of Skodas Indian operations, told Business Standard.

Skoda had earmarked an initial investment of Rs 600 crore in its Indian venture with targeted sales of 60,000 cars by year 2001.

Hassan added that the Volkswagen group had yet to take a final decision on whether marketing of the Audi range in India will be taken up along with the Skoda cars, or as a separate operation. The exclusivity of the marketing plans is to be shortly decided by the Audi and Skoda boards, he said. He clarified that talks with Sai Services, one of the largest dealers in the country, were on for a marketing alliance only, and that similar talks were being held with many other dealers.

Meanwhile in a press briefing yesterday, Eicher group vice-chairman Subodh Bhargava announced that Eicher and Skoda had last month called off the joint venture talks as the two companies had failed to agree on the equity holding structure in Skodas proposed passenger car venture in the country.

Negotiations between the two companies, which began in February 1996, had been stalled for some months over the issue of equity holding.

Eicher had offered to pick up only 26 per cent of the equity, against the 49 per cent offered by the Czech car-maker, which wanted to retain the majority control.

Eicher has also decided against its Chatenet car project due to adverse an market-feasibility report, thus putting a complete stop to any investment in the domestic passenger car segment for the time being.

Bhargava announced that Eicher had no car plans at the moment. Eicher and Skoda have agreed to call off discussions for car manufacturing due to inability to conclude our joint venture structuring. We were interested in a long-term management role, and not as a financier or as an entry vehicle for another company. He said the group had in the meantime finalised an investment blueprint for the 1998-2000 period to pump in Rs 200 crore in its heavy commercial vehicles & trucks, motorcycles and tractor expansion plans.

Eicher has also identified auto components sector as an investment thrust area. It is looking to invest in gear business for the OEM industry and the replacement market. It has decided to identify component products based on certain guidelines: at least 40-50 per cent should be exportable, based on high-technology, and envisage investment of at least Rs 50 crore.

The group will invest Rs 200 crore by March 1998 in doubling the current production capacity of tractors, motorcycles, engines and gears.