Russia’s GAZ Launches Production of New Skoda Octavia

VIENNA – Volume assembly of the new-generation Skoda Octavia is under way at GAZ Group’s plant in Nizhny Novgorod, Russia.

The Octavia, built from complete-knocked-down kits sourced from Czech Republic, is the third model made at GAZ according to a contract-manufacturing agreement with Volkswagen Group.

GAZ launched assembly of the Skoda Yeti from semi-knocked-down kits in November 2011 and switched to CKD in November 2012. It added CKD output of the VW Jetta earlier this year.

Russia is Skoda’s third-most important market behind China and Germany.

“The Octavia currently accounts for more than half of Skoda’s sales in Russia,” Skoda CEO Winfried Vahland says in a prepared statement. “In launching the third Octavia generation, we are aiming to extend the great success story this best-seller of ours has been writing and permanently boost our brand’s growth in Russia.”

Last year, Skoda set a sales record in Russia with 99,100 deliveries. It sold 33,700 cars in the country this year through May.

In 2012, Skoda sold about 52,000 Octavias to Russian customers, equivalent to 52% of the brand’s volume in the country. In the first five months of 2013, Octavia’s share of Skoda deliveries reached 56%, as about 18,800 customers opted for the car.

VW assembled the previous-generation Octavia at its own Russian plant in Kaluga but contracted with GAZ for output of its successor, as the German auto maker is adding Skoda Rapid production in Kaluga.

In Kaluga, Volkswagen also assembles the VW Polo Sedan and Tiguan and Skoda Fabia from CKD kits. The plant builds VW Touareg and Multivan vehicles and some Audi models in small volumes from SKD kits.

The Polo Sedan has the highest local content among Volkswagen Group’s Russia-built cars, Marcus Osegowitsch, general director-Volkswagen Group Rus, tells WardsAuto.

The Polo Sedan, which is not manufactured elsewhere in Europe, has more than 70% local value-added according to the way it is tabulated in Russia.

VW is sourcing significant stamped parts for the Polo Sedan from adjacent supplier Gestamp Severstal Kaluga.

Osegowitsch says VW also will source sheet-metal parts for the GAZ-assembled Octavia and Jetta models from Gestamp Severstal Kaluga. “That means that we will localize both cars relatively deeply as well,” he says.