Volkswagen AG has increased its share holding from 70 per cent to 100 per cent in Czech car manufacturer, Škoda Auto. At a meeting of the Supervisory Board of Volkswagen AG held on 22 May, it was agreed that Volkswagen would purchase the remaining 30 per cent share from the Czech Government at a cost of DM 650 million.
The Volkswagen/Škoda alliance began nine years ago in April 1991 when Volkswagen purchased a 31 per cent holding in the company at a cost of DM 2.05 billion, and acquired full management control. It was at this point that Škoda began its rejuvenation, with improvements in production facilities, quality control systems and a strategic research and new product development programme. In December 1994 Volkswagen increased its share holding in Škoda to 60.43 per cent. At the same time Škoda was ready to launch its first all new car, developed in conjunction with Volkswagen, the Felicia. The Felicia has become Škoda’s most successful model to date with more than 1.25 million vehicles sold worldwide.
In December 1995, Volkswagen again increased its share holding to 70 per cent at a total cost of DM 1.4 billion, and ensuring the continuing rise of Škoda’s star. A state-of the-art assembly plant was constructed to build the next new car, the Octavia (based on the Golf A4 platform), which was launched in late 1996. Profitability for Škoda, DM 8.7 million (£2.7m), was achieved for the first time in 1996.
More than DM 3 billion was invested in Škoda between 1991 and 1998, with a further DM 3 billion earmarked for investment before the end of 2003. The money has funded a host of projects to ensure that Škoda maintains and builds upon its position as a leading automotive manufacturer. These major projects cover all areas from research and development facilities, new and more environmentally friendly production methods, a new engine plant, press shop and paint shop. The most recent projects include a state of the art Parts Distribution centre and a flagship customer centre and the brand new Fabia assembly plant, constructed at a cost of DM 192 million.
Since 1991 annual production and world-wide sales have risen from 172,000 to over 400,000 and export markets increased to 70 from 30. It’s importance in the Czech Republic means that a member of the Czech State Government will continue as a member of the Škoda Auto Supervisory Board.