Skoda Auto's manager of exports to Western Europe and overseas, Ralf Berckhan, has confirmed that the Czech car maker has postponed building an assembly plant in Latin America because of the region's economic crisis.

That, for the moment, ends speculation about the building of a factory in the northern Colombian port of Santa Marta, writes Juan Carlos Vargas.

"Despite the [incentive to] locally assemble cars in Colombia, due to tariffs on imported cars, the market structure does not permit this kind of project," Berckhan said in an exclusive interview with just-auto.com.


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"Our strategy will be the same as in recent years: improve the present business. Today there are no plans for local production in Latin America, including Brazil, Argentina, Mexico and Colombia," Berckhan added.

As far as Mexico was concerned, he said: "There are no concrete plans to enter that country because of the strong presence of Volkswagen and the recent launch of the Seat brand".

Berckhan said Skoda is aiming to sell 460,000 cars worldwide this year, a 10 percent increase on 2000 and around 45,000 in Latin America. All markets will be targeted with new products such as the recently-launched Fabia Combi station wagon and the Fabia sedan.

Although it has ruled out Latin American assembly for the moment, Skoda will still enter new markets like Guatemala, Costa Rica and French Guyana with built-up cars shipped from its eastern European factories.

Colombia will get the Fabia Combi and sedan in the first week of July though these built-up vehicles will be handicapped by the 35 percent import tariff and VAT rates currently applied to fully-imported cars.


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In view of this government policy, however, a European Commission delegation visited Colombia a few weeks ago to investigate Volkswagen Group claims, made at the beginning of 2001, of a trade discrimination policy in favour of locally-assembled cars with engine sizes of 1.4-litres or less.

Such models attract no import tariff and pay a VAT rate of only 20 percent.

Latin America Skoda general manager Christian Wiegel said: "We definitely do not agree with this discrimination but there's nothing we can do. We respect the local rules and despite that we have a sales target of 500 cars this year."

Colombian dealer Ricardo Morales said: "The difference between CBU and CKD VAT rates is not only unfair but detrimental to the country because those barriers hinder the development of the local industry.

"The Colombian government should stop the discrimination if it want to improve industry competitiveness."

Morales believes VAT on imported cars should be set at the same 20 percent level as for locally-assembled models.

Skoda has operated in Colombia since 1993, and has sold around 16,000 cars to date.


To view related research reports, please follow the links below:-

The world's car manufacturers: A financial and operating review

The automotive industry in Latin America: Mexico, Brazil and Argentina Forecasts to 2005


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