INTERVIEW-VW to decide in Nov on model expansion in Slovakia

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Europe's top car maker Volkswagen will decide next month whether its Slovak unit will produce the successful mid-range Skoda Octavia model, VW Slovakia Chairman Andreas Tostmann said on Tuesday.

Tostmann also told Reuters in an interview that no capacity increase or significant investment would be needed if Octavia became part of the factory's model mix.

Volkswagen's factory is Slovakia's biggest company by sales and its top exporter with a 15 percent share of overall exports. Its output swings influence the economy, and its results and plans are closely watched by financial markets.

"It is not decided. It (Octavia) is one option in our planning process, which we have in our group," Tostmann said. "We will come to a final decision in mid-November."

A source from VW's Czech unit, Skoda Auto, told Reuters last month that assembly of Octavia would begin in the Slovak capital Bratislava in addition to Skoda's main factory. Skoda expects to make 616,000 cars this year and 1 million units in 2010.

Tostmann said production of Octavia would not require major refitting of the Bratislava plant, adding it was not clear yet what would be the volume or precise timing of a launch, seen in 2008 if it proceeds.

He said the Bratislava plant, which has maximum capacity of 270,000 cars a year, would continue with its current product range if Octavia was not added.

"(VW) Touareg and (Audi) Q7 are only made in this plant, so we will continue with these models. There is no successor coming up in this product range next year," Tostmann said.

He declined to comment on any possible launch of a brand new model in Bratislava in 2010.

In recent years, the Slovak plant has shifted focus to models with higher added value, such as Touareg and Q7 sport utility vehicles (SUV). It also makes Cayenne SUV bodies for Porsche and the VW Polo.

Tostmann said demand remained strong for SUVs, but declined to comment on expected revenues for 2007. High demand for Audi Q7 boosted the plant's revenues by 25 percent to a record 5.2 billion euros ($7.30 billion) in 2006.

He kept his May forecast that VW Slovakia will produce around 250,000 cars this year, up from 238,657 vehicles in 2006.

The share of SUVs in the plant's total output should rise to 80 percent this year, from 68 percent in 2006.

Slovakia is expected to produce over 800,000 cars a year by 2010 and become the world's largest car maker per capita after new plants of France's PSA Peugeot Citroen and South Korea's Kia Motors reach full output.

VW expects to maintain investments at around last year's 41 million euros in 2007 and 2008. The German company has invested 1.34 billion euros in Slovakia between 1991 and 2006.

($1=.7120 Euro)

Keywords: SLOVAKIA VOLKSWAGEN/

[BRATISLAVA/Reuters/Finance.cz]