Skoda sees sales growth returning after 2013 profit drop

Volkswagen's Czech unit Skoda expects to return to sales growth this year thanks to a build-up of orders and signs of recovery in many of its markets, the carmaker said on Monday after posting a 25.5 percent drop in 2013 profit.

Skoda is counting on the launch of new models to propel it towards a goal of selling 1.5 million cars annually by 2018 and has said it is set to hit 1 million for the first time in 2014.

Vehicle sales dipped 2 percent to 920,800 cars in 2013.

"It was a pleasing start to the year, a good level of orders and ever-more positive signals from markets convinces us that we will be able to continue in growth this year," Skoda CEO Winfried Vahland said in a statement today.

Skoda's sales suffered in the first half of 2013 during the switch over to a new version of its Octavia compact but have since rebounded as production was ramped up to meet a backlog of orders.

Sales jumped by 16.5 percent in January and rose 4.5 percent in February, helping it post its best ever start to a year.

The success of VW's mass-market brands, comprising Skoda, Seat and its core VW cars, are crucial to the German group's goal to become the world's biggest automaker by 2018.

Skoda's sales last year grew in Europe, where it makes about two thirds of revenues, despite a sluggish economy hurting car demand, although China was again its biggest individual country for sales.

"Europe is and will stay our main market. The goal is to increase our market share in Europe to more than 5 percent, currently we have over 4 percent," Vahland said.

Ukraine sanctions

He said that the company was not expecting a severe impact on markets in Russia and Ukraine because of a building crisis over the latter's Crimea region, which formally applied to join Russia on Monday in a move that will trigger European sanctions.

"Russia and Ukraine are important markets for us (so) we are monitoring the situation there," Vahland said. "We do not expect harsh sanctions against Russia."

Skoda's deliveries in Russia dropped to 87,500 cars in 2013, from 99,100 cars in 2012.

New SUV

On Friday, Skoda said it will produce a new model at its Kvasiny plant in the Czech Republic.

The carmaker did not name the vehicle but reports have said it will be a compact five- and seven-seat SUV based on the VW Tiguan likely called the Snowman, with production due to start in 2016.

The Kvasiny factory would also build a version for Seat, Czech reports said.