First of all, there is no doubt that Skoda Auto is the most prestigeous and the No.1 company of the Czech Republic. Could you give us a brief historical background about the Skoda Auto?
Skoda Auto company was established in 1895 and the production of cars started in 1905 in that company. That makes Skoda Auto company to be one of the three oldest in Europe. The original name of the company was Laurin & Clement and we keep this name for our most luxurious models until today. In 1935 we were acquired by Skoda Pilsen and since then the company bears the name Skoda. In 1991, Skoda was then a joint stock company and the company was entered by Volkswagen. The original stock share acquired was 30%, currently
since 1995 they control 70%. In 1998 the name of the company changed from Skoda to Skoda Auto to be clearly distinguished from Skoda Pilsen due to the different development in both companies. Currently we employ 22 000 people and our turnover last year 1999 amounted to 110 billion Czech crowns.
To come back to the entering of Volkswagen to Skoda Auto, how much investment did they bring so far?
It is very difficult to establish what was the size of investment of Volkswagen because our investment policy is such that we cover investment from our own cash flow and in fact the initial investment Volkswagen made went to the government budget for selling the stock.
Talking about the Czech Republic and may be more about the local market you still have around 50% of the market but it seems that you are losing a little bit some part of the market, do you confirm this? Is it because you are going to a more expensive cars?
I find this question a little bit funny at each occasion. I always respond by saying "show me another car company anywhere in the world apart from Russia that would have more than 40% of the domestic market. Since we are still somewhere between 53 and 49% of the market I do not think we can see it as a decline. There was a little bit more substantial decline in 1999 and that was because there were expectations connected with launching the new model Fabia and also due to the very high volume of imported used cars from abroad. Our February and March figures indicate that we have already gone over the 50% again. As far as competition is concerned the Czech market is fully comparable to any western market.
Talking about the Czech market, how is the Czech market changing and what are the new customer requirements ?
I think it's due to the fact that there are high competition requirement and expectation of Czech consumers and they are becoming more demanding and believe that our two cars Fabia and Octavia due to the very high use value they offer are still more attractive to Czech consumers than imported cars. When I consider the both technical parameters and the esthetic qualities of Fabia and Felicia and compare it to the price there is really more value for the price that you get with these cars than with foreign cars.
Talking about the production in the Czech Republic, is there a need for the expansion of Skoda production facilities and which are going to be the investments you are going to do in this area?
There are two investment projects that are in progress at this moment, one is in Polish town Poznan when at present 40 000 cars are assembled. Another plant is in India where we assemble our Octavia cars, this year we are looking at 3000 cars but in the longer perspective at about 10 000 cars. We have been in negotiations for some time to establish a larger facility in Russia, in Izevsk, the negotiations are quite advanced we are coming to a conclusion dealing with the last details. We assume the assembly will begin this year. As regards the Sarajevo investment in a new plant, this is not our own Skoda investment but a joint venture of the Volkswagen and Unis and our cars are going to be assembled there.
There were some rumors that may be in Iran you are going to buy a car factory..
It is very premature to talk about it, there are some indications but I can not say more at this moment.
Talking about the foreign markets, what is the share of your production that you are exporting, to which markets and which are your priorities on the markets you are targeting?
Generally speaking we export about 80% of our production, 380 000 last year out of which 192 000 cars went to western Europe. However we make no distinction between and among markets, all the markets have to receive cars of the same quality. This year we plan to export 360 000 cars, the most important market in Europe for us is Germany where we have somewhere between 1.8 and 1.9 market share. According to some most recent figures Octavia ranked 9 in its category when it comes to ranking by most sold cars. This market is followed by two other markets which is Poland and Slovakia. In Poland we sell some 40 000 cars and we have a 7% share in the market, Slovakia is very interesting we have 56% market share. In Austria we have about 5.7% market share, we have over 5% market share in Sweden and in Denmark also 5%.
What about going more eastern because you are providing high quality cars not too expensive, what about going to Russia, Bulgaria or Romania...
There are some problems in these regions. We see a very good increase in the Hungarian market however Hungarian market is very small. When speaking about Romania and Bulgaria we are currently looking at dozens or perhaps hundreds of cars because the purchasing power is not very strong in these countries yet. I need to note that our cars are not all that cheap when you look at the purchasing power and purchasing capabilities in these countries. Russia is a problem when you have a local car manufacturers who sell cars for around 3 500 US dollars so it is very hard to compete is such a market. However in terms of our objectives and target it is an interesting market and we are waiting for the situation to get a little bit settled down and for the prices to get more comparative to ours. Given our own production in the region we would be able to produce at a price that would be acceptable to a Russian client. | Going even further east and speaking about China there of course we have the problem of import licences. Last year we exported 1000 cars for which we had licence, this year we are looking at 2000.
Last year you have launched Skoda Fabia, it seems to be the car of the year, so as a Chairman of the Board could you talk a little bit about this car?
It is a little bit more complicated than that. There were several competitions of that sort. In Car of the year itself Fabia ranked fourth, no comment on that. As regards another such contest takes place in Germany under the name of Golden steering wheel Fabia did take the first place looking at the very same competition as with the Car of the year. In Auto 1 that was announced in Geneva, Fabia ended third acquiring only two points less that the second contestant which was Zafira and acquiring ten points more than the fourth competitor which was Toyota Jaris, which is by the way the car of the year. In England we acquired a very prestigeous award. What is especially delicate about the award that we received in England is the fact that it was prior to Fabia even being launched to the British market. And in three other countries in addition to that Fabia became No 1, in the Czech Republic, in Croatia and in Austria.
What about the sale so far, are you satisfied?
In our sales for the first two months of the year and also including the indicative number for the third month we have increased our sales by 14 to 15% as compared to last year. But for instance in Germany this annual increase is as much as 40%. In the Czech Republic the increase as compared to the last year is about 25% however these figures that we compared with, that of last year were quite low.
You have also announced that you are going to introduce new high or middle class cars soon, do you confirm this?
I can not say more about it.
As a Chairman of the board, what has been the success of building such a good company with such a good reputation?
There are many factors that has influenced this success. The leading factor indeed is that Volkswagen entered into Skoda Auto. As a result the historic technical capabilities of Skoda joined with the technical skills and capabilities and possibilities of Volkswagen. So that was one factor that contributed to the success. The other factor is the fact that we were able to acquire sales and marketing skills know-how and the most important contributing factor was the fact that with Volkswagen methodology in requirement for quality that were inherent to this company also were introduced to Skoda. All this was achieved that in the early stage there were as many as 260 specialists that joined our team from Volkswagen and these were all workers with very high skills in their field and with the very high potential to help us develop the production. We introduced a method that is known as Tandem management of the departments. So there was a German manager of each division and department with a Czech deputy or assistant manager and vice versa Czech manager had the German assistant manager. As a result today we have 58 foreign employees still but we are still keeping the same pace of the development. Another important factor is the fact that we only had and still have only two shareholders who are stable and steady shareholders that allows us to really concentrate on what we are supposed to do, what we are paid for.
We also came to interview you as a businessman. Could you give us a brief background about your own professional experience?
This is always a problem for me. Because everybody usually comes with a particular credo or leitmotiv that you have for your work, my is somewhat peculiar, somewhat funny and this is really a slogan developed by a non-existing sort of made up play-write, and the credo is: "Future is in aluminium".
What has been your most satisfying personal achievement?
Apart from my successes in sports, perhaps my greatest achievement is what I do right now.
What was your successes in sports?
There is a total of three of these achievements out of which for me the most important is the fact that I ran the marathon four times. I played super league in volleyball and one year I ended fourth in auto-rally. My current greatest achievement in the sports arena apart from the fact that I am still alive and can move is the fact that in the rounds I do not lose the one but the last from sight and I am not overtaken by the person who is in the car that is the first that is running around.
As a final issue, what would be your final message to our readers?
I usually refer this question to the spokesperson. I do not know if this is really a message but there is something, certain wisdom that I read at some point and it says that 'there are many people who have simple solutions to complex problems' but not always these solutions are the best solutions. And the lesson you take from this is that really getting to get solution is a process to which you need to really work hard and take time. |
