Skoda Auto has record profits

The biggest Czech firm Skoda Auto increased its profits by amazing sixty per cent compared with the first six months of the last year. Its profits were 6.4 bn crowns whereas the profit for same period in the year 2005 was under 4 bn. The profits spiral upwards not only thanks to more sales (13 per cent) but also due to successful cost cutting. Total earnings exceeded one hundred bn crowns which makes Skoda’s shareholders very happy.

The best selling cars are Octavia and Fabia but the new model Roomster also experiences better entrance onto the market than was expected.

The success of the automobile maker is attributable mainly to demand from the west such as from its biggest market – Germany. Skoda expects more orders from this area due to the increase in German value added tax next year. This may make people bring forward their purchase of a new vehicle.

The increased car production is not only a feature of Skoda Auto but also of other firms. With the planned construction of the new South Korean Hyundai factory in the Czech Republic economists predict that automobile industry may form up to one quarter of Czech industry altogether within four years. This development is sometimes criticized as a sign of industry being too concentrated which makes it vulnerable in the case of unexpected changes in the market conditions.

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