Skoda is close to choosing the location for a new factory with Serbia emerging as the favorite. Speculation about the plant’s location has been intense since Skoda’s parent, VW Group, said it wanted to build factory in eastern Europe, with Skoda likely to take the lead.
Skoda CEO Bernhard Maier said the automaker has reduced the number of candidate countries to four but declined to name them.
“We are still in the analysis phase. It’s not an easy decision,” he said on the sidelines of the Geneva auto show.
A decision could be made in the first half, Maier said. The plant is scheduled start production after 2022 but a potential roadblock is opposition from Volkswagen workers in Germany.
VW’s IG Metall union has said it would like to see excess capacity filled at German plants before a new plant is built, the German business paper Handelsblatt reported.
Earlier this month, Serbian daily Vecernje Novosti reported that VW Group has already chosen Serbia to build Skoda and Seat SUVs.
Other reports said Turkey was the preferred choice, but the country has fallen out of favor as its economic problems threaten the country’s position as the world’s number one exporter of vehicles into the EU.
Last year the dramatic fall in the value of the Turkish lira cut local sales of cars and light commercial vehicles by 35 percent and contributed a 9 percent fall vehicle production to 1.75 million units Bulgaria and Romania had been considered for the planning but were now out of the running.
Serbia is the location of Fiat’s factory in Kragujevac, which currently builds the 500L minivan. The factory was idled for two months over Christmas as demand for the model fell, but local media speculate Fiat will add a new small SUV to the plant within the next year.
Record production at Skoda’s two plants in the Czech Republic has increased delivery times and restricted sales for the brand. Last year the Mlada Boleslav and Kvasiny plants built 886,100 vehicles, an increase of 3.1 percent the year before.
In February Skoda started production of the new Scala compact, a replacement for the Rapid, in Mlada Boleslav, and is about to start production of a new vehicle, the Skoda Kamiq small SUV.
Maier said the capacity problems could restrict sales of the Kamiq. “Currently we are still limited with capacity,” he said.
VW Group is reorganizing European production to focus output of its new mass-market electric cars for the VW, Audi and Seat brands in Germany. The change means that production of the VW Passat midsize model will shift to Skoda’s plant in Kvasiny in 2023 from Germany. The Passat will be produced alongside the related Skoda Superb and the Kodiaq midsize SUV.
Skoda has been negotiating with the unions at its Mlada Boleslav plant to increase the number of shifts and improve productivity. The company is facing demands for higher wages as the country’s low unemployment rate strengthens the workers’ bargaining position.