· Skoda will invest in SAIC Volkswagen to invest heavily in the development of various SUVs

Recently, Chinese President Xi Jinping visited the Czech Republic, during which local car brand Skoda announced a strategic plan to strengthen its performance in the Chinese market. Skoda will participate in SAIC Volkswagen, the parent company of Volkswagen's parent company in China. In the next five years, it will invest 2 billion euros in China to expand its product lineup and create a variety of SUVs and crossovers.
2 billion euros investment to create a variety of SUV
From March 29 to 30, 2016, Chinese President Xi Jinping paid a state visit to the Czech Republic to promote economic and business exchanges and cooperation between the two countries. During this period, Czech local car brand Skoda, its parent company Volkswagen Group and Volkswagen's joint venture partner in China, SAIC, signed a memorandum to confirm Skoda's medium-term development plan in the Chinese market and enhance its performance in China.
The main content of the memorandum has two main points. Skoda will be a shareholder of SAIC Volkswagen. In five years, Skoda will invest 2 billion euros in China.
In the next five years, Skoda will invest about 2 billion euros in the Chinese market, which is about 14.7 billion yuan at the current exchange rate. The investment is mainly used to expand the lineup of models in China, to build more SUVs and cross-border models in line with the consumption trend of the Chinese automobile market, and to increase investment in electric drive vehicles and vehicle networking.
In the automotive industry, Skoda, born in 1905, is one of the very few “old stores” of all brands with a history of 100 years. It is also very early in China. As early as 1936, Skoda had established five offices in China. In 2000, Skoda was acquired by Volkswagen. After that, it signed a contract with Shanghai Volkswagen (now SAIC Volkswagen) in 2005. In mid-2007, it started production of Octavia models in Shanghai Volkswagen. Today, China has become the largest single market for Skoda.
In 2015, Skoda sold 281,700 units in the Chinese market, accounting for about a quarter of its global sales, an order of magnitude higher than the 27,300 units sold in 2007. To date, Skoda has sold more than 1.7 million units in China. According to Skoda CEO Bernhard Maier, the brand plans to double its sales in China by 2020, which is an increase of nearly 600,000 annual sales.
The development of the model lineup will be the focus of Skoda's mid-term planning in China. At present, Skoda sells a total of 6 domestic cars in the Chinese market: small car Jing Rui, compact car Hao Rui, compact hatchback, compact car Octavia, mid-size car speed (formerly Hao Rui) and compact SUV wild Emperor.
Skoda realized that the Chinese market has a preference for SUVs and announced that it will launch an SUV offensive in China. During the Beijing Auto Show in April this year, Skoda will bring the production version of its first medium and large SUV, and the concept car Vision S has already appeared. It is reported that the new car specifications are close to the BMW X4, which will be put into production at the SAIC-Volkswagen Changsha plant and will be launched in the second half of 2017.
Skoda is also developing another large SUV, which is expected to enter China. Before the foreign media asked if Mebona would create a new SUV with specifications larger or smaller than Vision S, the answer was “depending on market demand”. In addition, Skoda plans to build a crossover utility vehicle for the Chinese market.
The existing wild models will be updated in the next few years. The current domestically produced wild emperor has exceeded 60mm in the wheelbase than the European version. In the first two months of this year, sales in China soared by 200% year-on-year. The next generation of wild emperors is further expanded in size, and is more adaptable to the pursuit of internal space by Chinese consumers.
For the future development trend of the automobile, Skoda also attaches great importance to the development of electrified new energy vehicles for China, improving the environmental protection of vehicles; promoting the development of vehicle networking, linking Skoda brand vehicles with the Internet, and promoting personal digital transportation.
Skoda shares in SAIC Volkswagen, learning Audi and FAW-Volkswagen?
According to the memorandum, Skoda “will gain a shareholding position in the joint venture SAIC Volkswagen Co., Ltd.” and has obtained approval from relevant departments. However, the shareholding ratio was not disclosed, and the source of shares held by Skoda was not disclosed. At present, the shares of the two joint venture subsidiaries of the Volkswagen Group in the Chinese market are different. The SAIC Volkswagen is the 50:50 shareholding of SAIC and Volkswagen, while FAW-Volkswagen is the FAW Group, Volkswagen and Audi. : 30:10 ratio of holding shares.
The stock ratio determines the profit distribution and the party’s right to speak in the joint venture company, especially 50% is a threshold. Therefore, the shareholding structure is a focus of focus in the Sino-foreign joint venture model. In the FAW-Volkswagen shareholding structure, Audi has a higher status and contributed 10% of the shares because it contributed more than half of the profits of the joint venture. In the future, Audi hopes to obtain a 9% stake in FAW-Volkswagen from FAW, which will increase the share ratio. To 19%, the ratio of shares between China and foreign countries will be 51:49, and FAW will obtain a number of SUV production rights from the public by giving up some of its equity advantages. However, because Volkswagen fell into the "tail valve" scandal last year, the economic losses were huge, which delayed the increase in the FAW-Volkswagen plan.
Referring to the existing share ratio of Audi in FAW-Volkswagen, Skoda may hold a stake ranging from 5% to 10% of SAIC Volkswagen. The source should be the public side of the parent company, and if the equity is to be obtained from the Chinese side, it means that the balance between the Chinese and foreign stocks will be broken, which is inconsistent with the current policy. In addition, the public is cheating in the exhaust emissions, and the losses are severe under severe punishment, which is in urgent need of blood. In 2014, Skoda's global sales exceeded the million mark. In 2015, it achieved an operating income of 12.5 billion euros. Operating profit increased 12% year-on-year to 915 million euros. The profit margin was 7.3% significantly higher than that of the public. It can completely "transfusion" for the parent company. .
As a century-old brand in the automotive industry, Skoda has renewed its vitality in this ancient and modern civilization of China, and will even feed back the parent company. However, in the face of staff turnover (such as former CEO Fan Ander), parent company funding black hole and increasingly fierce market competition, Skoda will still face many challenges in China. In the next five years, whether Skoda can produce a satisfactory answer and become a new savior of the public (the one) is the answer.

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