Czech Skoda Auto has record 2006 sales, production

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Czech Skoda Auto, a unit of Germany's Volkswagen AG, said on Thursday it posted record sales and production in 2006 despite market stagnation in central Europe.

Skoda Auto, the Czech Republic's largest exporter, said 2006 sales rose 11.7 percent annually to 549,667 vehicles, while production was up 12.6 percent at 556,347 vehicles.

Sales revenues were up 8.7 percent on the year at 203.7 billion crowns ($9.50 billion), helping operational profit jump 34.5 percent to 14.6 billion crowns.

"The year 2006 was the most successful year for the Skoda Auto group in its history," said board member Holger Kintscher.

Skoda Auto, once the butt of auto industry jokes for its reputation for producing low-quality cars during the Communist era, now has Volkswagen laughing all the way to the bank.

Volkswagen, the world's fourth-largest carmaker, took an initial stake in Skoda in 1991 and eventually upped it to full ownership, vowing to rebuild the decrepit communist-era firm known for its clunky designs.

Once located entirely in the town of Mlada Boleslav, 50 km (30 miles) northeast of Prague, Skoda now has units in India, Germany, Slovakia, Poland and Russia.

Volkswagen paid some $650 million for the stake and has invested about $2 billion more, a lot of which has come from the Czech car maker itself.

Local fears over German invaders have turned to pride as outdated models were replaced with Volkswagen-engineered technologies that did away with Skoda's boxy designs and now look more like VW's popular lines such as the Golf and Passat.

At a time when many in the industry are shedding employees, Skoda said its workforce grew in 2006 by 2.1 percent to 23,034 as it added a fourth model, the MPV Roomster.

"The year 2006 was exceptional for us in so many ways," said Skoda Auto Chief Executive Officer Detlef Wittig.

"We successfully implemented the fourth model, the Roomster, we managed to break through the magical half million level in production and sales, and we closed the year with record results."

He added that while Skoda plans to try and solidify its market share in Europe in 2007, it is also firmly setting its sights on markets such as China, Russia and India.

Earlier this week Wittig said Skoda Auto was considering building a new, cheap small car for developing markets where "customers there make their (purchasing) decisions purely on the basis of price".

[PRAGUE/Reuters/Finance.cz]