The fastest Octavia of all time is

Transcription

1 Newsletter New ŠKODA Octavia RS at Goodwood racetrack The new ŠKODA Octavia RS was the star at this year s Goodwood Festival of Speed. On July 10th, the eve of this legendary motorsport event, ŠKODA presented its new compact sports model on the racetrack and beside it. The fastest Octavia of all time is the most recent model in the largest model offensive in the company s history, impressing both as a saloon and an estate with powerful yet efficient engines, a sporty, attractive design, new RS wheels and innovative technology. The new Octavia RS is about pure emotion and brings ŠKODA s concentrated power to the road. This makes Goodwood the perfect setting for the debut of the fastest Octavia of all time, says ŠKODA CEO Winfried Vahland. More than 100,000 visitors, fascinating motorsport that you can touch, automobile traditions and enthusiasm it is this unique mixture which creates the charm of Goodwood. The new Octavia RS will be the highlight of this motorsport feast, says Vahland. The new Octavia RS will accelerate from 0 to 100 km/h in 6.8 seconds. Top speed in the 162 kw (220 HP) 2.0 TSI petrol engine-version with manual transmission is 248 km/h. Compared to the second-generation Octavia RS, the new engines have up to ten per cent more displacement permitting significantly higher power output while still lowering fuel consumption by up to 19 per cent. The ŠKODA Octavia RS s new progressive steering lets drivers achieve a desired turning radius with smaller movements of the steering wheel resulting in less repositioning of the hands in tight curves. The design of the new ŠKODA Octavia RS speaks style and class, for instance at the front in the interplay of ŠKODA s characteristic grille, air intakes with their A sporty black design marks the interior of the Octavia RS including new ambient lights in the door handles, new RS-design sports seats and a sporty three-spoke steering wheel with perforated leather. hive structure, new front apron and RS-design fog lamps as well as new bi-xenon headlights with integrated LED daytime running lights, now standard. The car s side aspect is marked by lowered clearance and by the new 17-, 18- and 19-inch alloy wheels. The rear is dominated by a distinctive black diffusor element, broad reflectors and two large-bore chrome exhaust end pipes as well as standard LED tail lights The new ŠKODA Octavia Combi RS: A perfect blend of sportiness, space and functionality. in brand-typical C design and a rear spoiler. A sporty black design marks the interior of the Octavia RS including new ambient lights in the door handles, new RS-design sports seats and a sporty three-spoke steering wheel with perforated leather. The shift knob and the handbrake handle are also leather, while the door sills and pedals are stainless steel. German Design Council honours ŠKODA Octavia says Andrej Kupetz, general manager Renowned experts have agreed that the ŠKODA Octavia sets new standards in the compact segment. The saloon s third generation took top awards in the Exterior Volume Brand category of the 2013 Automotive Brand Contest hosted by the German Design Council (Rat für Formgebung). This was the first time an independent jury at this international design competition presented the award in this category. In awarding ŠKODA Octavia the top honour in the competition, the jury recognised the outstanding new design of this ŠKODA bestseller. ŠKODA design chief Jozef Kabaň and his team have restyled the car from head to toe. Never before has an Octavia stood so dynamic and simultaneously so timelessly elegant, so distinctive, so high in quality and so assured in appearance as the model s third generation. Besides its new design, the Octavia impresses with an unmatched space offering, functionality, innovative safety and comfort systems, fuel efficiency, numerous Simply Clever ideas and ŠKODA-typical price/value ratio. The ŠKODA Octavia is the heart of our brand and our bestselling model by far, says ŠKODA CEO Winfried Vahland. The Automotive Brand Contest s jury s verdict amounts to special praise for the designers in Mladá Boleslav The Automotive Brand Contest s jury s verdict amounts to special praise for the designers in Mladá Boleslav as it assesses design across all brand products. Our comprehensive approach is what makes the Automotive Brand Contest so significant for the industry, of the German Design Council, adding: What we guarantee is a long-term and neutral assessment of branding in an international context. The German Design Council was founded in 1953 at the behest of the Bundestag, the lower house of Germany s parliament. It is an independent and internationally active foundation for the advancement of design, recognising outstanding product and communications design in nine categories and four special categories. Award classes cover the entire design spectrum and range from vehicle designs and concepts via brand design and meshed multimedia all the way to campaigns and events. The Automotive Brand Contest highlights the elementary importance of brands and their design in the automobile industry. This year s international jury at the contest comprised representatives of the media, design, brand communication and academia.

2 2 Newsletter The Citigo CNG boasts the world s lowest production of CO 2 ŠKODA AUTO has entered the market for natural gas-fuelled vehicles by launching the Citigo CNG, and the new ŠKODA Octavia will soon follow suit. Just like the Citigo CNG, the Octavia will offer the environmentally-friendly CNG drive, low operating costs and exceptional ease of use. We have interviewed Martin Hrdlička, Head of Engine and Chassis Development at ŠKODA AUTO. We look for ways that are financially acceptable for both us and the customer. Why has ŠKODA decided to go for the CNG technology right now? The production of CO 2 is the key aspect behind all alternative drives, and although humans are only responsible for 3.5% of the total production of CO 2 on the Earth (of which automotive production accounts for 5.5%), this aspect is a great motivation for us and we are looking for ways of reducing these CO 2 production volumes. However, the trick of the game is to find ways that are financially acceptable for both us and the customer. 75% of the CO 2 production is attributable to the use of the vehicle and only 25% to its manufacture. These figures show clearly that the space for addressing the CO 2 production involved in the operation of the vehicle is fairly big. And that is a big opportunity for CNG. The Volkswagen Group already offers a highly successful portfolio of models with low CO 2 levels models whose CO 2 production is less than 120g CO 2 /km and 36 models whose CO 2 production levels are below 100g CO 2 /km. ŠKODA offers 48 models below 120g CO 2 /km and 10 models below 100g CO 2 /km. Obviously, there is a number of other solutions as far as reducing the fuel consumption and CO 2 production is concerned, for example electro-mobility or hybrid vehicles. We have these technologies, too, and we know how to work with them. But these solutions still need time to ripen, so why not use something that is at our fingertips, i.e. a ready-touse technology that reduces the CO 2 production by 20%? It makes perfect sense to us, so we have decided to highlight the CNG drive and offer it as part of our portfolio. What is CNG and what are its benefits? CNG stands for Compressed Natural Gas, which is a frequent by-product in crude oil extraction but also occurs in exclusive deposits. You may be interested to know that until the nineteeneighties - and to some extent still today - most of the volume of this gas used to be/is burnt right at the deposits. The worldwide deposits of natural gas are enormous, and are generally expected by experts to provide enough gas for as much as 130 years. The largest deposits are in the Persian Gulf, North America and Russia there are several deposits in Russia, but their average quality is substantially higher. One of the benefits of natural gas is that it is basically sold in the form in which it is extracted, without any treatment or refining, in contrast with crude oil. At the same time, it is a form of highly compressed energy, which is exactly in line with the needs of automotive transport. And another big benefit is the octane number of CNG, approximately 130, because natural gas is basically methane - its purest form (for example from Russia) offers as much as 98% of methane, and lower-quality gases offer 89% or 85% of purity, which is why we generally differentiate between socalled High Gas and Low Gas. This is an aspect to consider also in our engine development process, because not all refuelling stations offer High Gas, and our engine management system has to be able to identify that. The consequences of lower quality gas include, for example, shorter range, just like when you buy lower-quality petrol for your combustion engine. What are the advantages and disadvantages of a CNG vehicle? The key benefits include environmental friendliness and low CO 2 production levels. For example, our ŠKODA Citigo CNG is a vehicle with the world s lowest production of CO 2, a fact not many people are aware of. Obviously, we are talking about series-production cars with combustion drives. Even hybrid vehicles do not achieve such results, and we are accordingly proud of that. Low operating costs are another substantial benefit, one of the aspects being tax allowances for natural gas that will be in force until 2018; in addition, many countries provide numerous benefits and subsidies in connection with this type of drive, and the transport ministries in the EU consider extending the force of the abovementioned tax allowance, which might further improve the market situation. One of the disadvantages in our country may be the limited network of refuelling stations, because it s still a bit like that debate about what was first out there an egg or a hen? To make it possible for the CNG drive to become more popular, the network of refuelling stations has to be bigger. However, the network is growing slowly, because the number of CNG vehicles is small. That is why we have given a clear signal to the companies engaged in sales and distribution of natural gas - we have, we produce and we will sell CNG vehicles. We promote this project by means of our vehicles, and when a player as big as ŠKODA or Volkswagen makes this absolutely clear, we expect positive reactions also from the others. What CNG models does ŠKODA currently offer and will the portfolio of these models grow in the future? How is ŠKODA involved in developing the CNG technology? At this moment we sell the Citigo CNG with a one-litre three-cylinder engine (50 kw). The Citigo CNG has a small petrol tank, but it is not the user who chooses the primary drive, i.e. the driver cannot decide whether they wish to drive on natural gas or petrol. CNG is the first-choice drive, and petrol is used only in the event of shortage of CNG and for starts in low outside temperatures. A combination of a small petrol tank that ensures higher mobility of the car by serving as a back-up in response to the limited network of refuelling stations plus two steel tanks of 72 litres in total, i.e. approximately 12 kg CNG, offers a total range of as much as 620 km, of which the ŠKODA Citigo can do 400 km on gas. At the same time, the Citigo CNG is fitted with the Greentec packet that includes braking energy recuperation, the Start-Stop system and tyres with reduced rolling resistance. Our second CNG model will be an Octavia to be presented early next year. The Octavia CNG will be a bivalent CNG drive, i.e. will have a full-size petrol tank plus two CNG bottles, and will be fitted with a 1.4 TSI 81 kw unit that is part of a new engine line based on the MQB platform. The total range will indeed be enormous, and one of the goals is low CO 2 production, definitely below 100g CO 2 /km. The benefits of the new engine will include high power and excellent dynamics to correspond with the vehicle s size. As for technological development, e.g. the Citigo is fitted with a system applied previously in its VW brother, but we also have our own development centre focused on CNG technology. Our department is preparing a project for China where the demand for CNG cars is growing and where the VW Group will offer CNG vehicles. These vehicles will be fitted with the EA MPI CNG engine that we are designing, testing and developing for VW. The launch of this engine is fast approaching it is scheduled for late this year. What adaptations are required for a vehicle to be fitted with the CNG system? And how safe are these cars? A number of adaptations and changes have to be made for optimum combustion of natural gas with a higher octane number. As the first step, we increase the compression ratio for the CNG engines. With monovalent CNG this compression ratio can be made even higher to achieve more effective combustion, but with bivalent and socalled quasi-monovalent drive (i.e. the one used in the Citigo CNG and to be also applied in the Octavia CNG) we increase the compression ratio only moderately. As CNG is burnt at higher temperatures than petrol, we also use different sparking plugs, and the gaseous (phase) injection is a reason for changing the engine lubrication ratios and the valve configuration. Things that we take for granted today include double injection, a special sensitive lambda probe for CNG engines able to identify the gas quality, i.e. High Gas or Low Gas, a specially adapted catalytic converter and two CNG bottles (200 bar). Last but not least, the engine control unit is able to control both petrol injection and CNG injection in line with predefined parameters and needs. As far as safety is concerned, I can assure you that at the end of the day CNG vehicles are perhaps even safer than traditional cars with petrol engines. The vehicles have to comply with a number of strict regulations and standards and undergo numerous stringent tests. The homologation process ensures maximum possible safety, and new EU legislation requires and governs the construction of new underground parking facilities suitable for CNG vehicles.

3 Newsletter 3 ŠKODA produces eleven-millionth engine ŠKODA built the elevenmillionth engine in its corporate history a 1.4 TSI motor of the model series EA211. Engines have been built in Mladá Boleslav since the year 1899 first for motorcycles and, from 1905 on, for automobiles. At the current time, the assembly lines at ŠKODA s main plant are producing modern 1.2l and 1.4l versions of the engine model series EA211 and EA111. About 3,600 employees manufacture up to 4,400 units every day. The Czech automobile manufacturer will continue to expand its knowledge in the development and manufacture of engines. Among engine developers and manufacturers in the automobile industry, ŠKODA has one of the richest track records, says ŠKODA s Chairman of the Board, Prof. Dr. h.c. Winfried Vahland. The number of eleven million manufactured assemblies since 1899 is representative for 114 years of Czech engineering in the development and manufacture of engines. We will continue to strengthen this know-how within the framework of the ŠKODA Growth Strategy, Vahland continues. 3,600 ŠKODA employees produce 4,400 petrol engines in Mladá Boleslav. The anniversary engine is a 1.4 TSI engine of the EA211 model series. Since the end of 2012, the Czech manufacturer has been building modern 1.2 and 1.4 TSI versions of this model series, which is used by the Volkswagen Group. The modern petrol engines with direct injection are intended for models by the ŠKODA, Audi, Seat and VW brands. The production of engines of the EA211 model series strengthens our manufacturing basis in the Czech Republic and underscores the important role of the ŠKODA production within the Volkswagen Group, says Michael Oeljeklaus, the ŠKODA board member for Production and Logistics. The TSI four-valve fourcylinders are setting new standards in energy efficiency, lightweight construction and engine power. Furthermore, the Czechs are currently building engines of the EA111 model series. The manufacturer wants to continue to expand its engine competence within the framework of the ŠKODA Growth Strategy. This endeavor is supported, among other things, through the construction of a new power-train center at the ŠKODA Development Center in Česana, near the company s seat in Mladá Boleslav. The car maker will invest more than 34 million EUR in this measure the largest investment currently being undertaken in the area of development in the Czech Republic. At its core, the new center will include more than 15 engine test stations with outputs ranging from 250 to 400 kw. In view of the increasing requirements concerning the global use of engines, it will facilitate the worldwide development of engines for the most diverse markets. New locations for ŠKODA Octavia The new ŠKODA Octavia is now also rolling of the production lines in the Ukraine and Kazakhstan. The Octavia, which is being produced with local partner companies, is the most requested ŠKODA model in both countries. The third generation of the ŠKODA best-seller is particularly impressive in terms of space, functionality and safety as well as being excellent value for money. The ŠKODA Octavia is the heart of our brand and after the start of production in our home plant in Mladá Boleslav, we are also starting production at other locations, explains Michael Oeljeklaus, ŠKODA Board Member for Production and Logistics. The Octavia is Kazakhstan s and the Ukraine s most popular ŠKODA model. Now, by starting the local production of the thirdgeneration Octavia in both countries, we aim to continue this success story. The production of the new Octavia in the Ukraine underlines the importance of this market for ŠKODA: In 2012 ŠKODA increased its deliveries to Ukrainian customers by around 32% to 14,400 vehicles. The market share increased to 6.6% (2011: 4.9%). ŠKODA vehicle production takes place in Solomonovo in partnership with Eurocar. The Fabia, Yeti, Superb and Roomster are also produced here from SKD (Semi-Knocked-Down) form. The new Octavia is also being produced in Ust-Kamenogorsk, northeast Kazakhstan in partnership with Azia Avto. Last year ŠKODA grew by 158% in Kazakhstan when approximately1,900 vehicles were delivered to customers (2011: 720). Alongside the Octavia, the Fabia, Yeti and Superb models are produced in Ust-Kamenogorsk from SKD form. Prefabricated car bodies from the Czech Republic are imported for the SKD production of the new Octavia in Kazakhstan and the Ukraine. The assembly takes place on site. Octavia Combi tops in residual values Launched only recently, the new third-generation ŠKODA Octavia Combi already ranks among the estate cars best in retaining their value in Europe, says a current EurotaxGlass study conducted in five European countries. The study compared a total of six compact estate cars with the Octavia Combi achieving forecast future residual values between 49 and 40 per cent after three years, clearly beating its direct competitors. The study looked at the markets in Germany, the Czech Republic, France, Italy and Great Britain. EurotaxGlass is an international automobile commerce service provider. The eponymous study forecasts newly introduced models expected loss in value across brands and is a recognised independent bellwether for cars stability in value. As part of its most recent study, EurotaxGlass compared six compact estate cars: the new ŠKODA Octavia Combi, the Ford Focus Combi, the Hyundai i30 Combi, the Opel Astra Sports Tourer, the Peugeot 308 SW and the Renault Mégane Grandtour. In all five countries, the study predicts the new ŠKODA Octavia Combi will achieve the best residual values compared to the other models after an assumed three years of service and mileage of 90,000 km. Depending on the country, the study forecasts future values for the new ŠKODA Octavia Combi to be between 49 and 40 per cent, which is to say that the new model, which was introduced on European markets in May 2013, scored better even than its direct predecessor generation. The study examines criteria such as mileage/co 2 emissions, price-value ratio, quality and reliability. Design and brand aspects also played a role. The new ŠKODA Octavia Combi scores best overall in residual value, achieving 49 per cent in Germany, the brand s second-strongest market worldwide. Here, the Octavia Combi in Ambition trim and with a 110 kw 2.0 TDI engine is second to none, its competitors achieving an average residual value of only 43 per cent. In the Czech Republic, its home market, the ŠKODA Octavia Combi s residual value is forecast at 45 per cent, a 7 per cent better than its competitors. Holding the TOP position ŠKODA AUTO has won the Czech Top 100 award for the sixteenth time. Once again, the Mladá Boleslav-based car manufacturer has been named the Most Important Enterprise in the Czech Republic. Landmark: one million cars made in China Shanghai Volkswagen plant had produced its one millionth ŠKODA car since 2007, a white 1.6 l ŠKODA Rapid. In the years ahead, ŠKODA intends to grow further in its strongest sales market, expanding its model range produced in the country from a current three to then six models by mid Making one million cars in China within just six years is evidence of our brand s impressive growth, says ŠKODA CEO Winfried Vahland. Working closely and trustfully with its partner Shanghai Volkswagen, SVW for short, ŠKODA has written an unparalleled success story in China since mid We are definitely going for more growth in China, reinforcing our model offensive and The award was taken over by ŠKODA AUTO Board Member for HR Management Bohdan Wojnar. ŠKODA has also won the independent category of the Most Admired Enterprise. The Czech ŠTop 100 awards are given to top Czech companies based on economic indicators and current developments in areas such as product quality, company val- ue, social responsibility and employer attractiveness. The award-giving ceremony was part of a gala evening at the Žofín Palace in Prague, and the award was taken over by ŠKODA AUTO Board Member for HR Management Bohdan Wojnar. Shanghai Volkswagen plant produced its one-millionth ŠKODA, a white ŠKODA Rapid. expanding our capacities. We intend to raise our sales in China to half a million cars per year, says Vahland. In 2012, China accounted for about a quarter of ŠKODA s worldwide sales of 939,200. Since the beginning of its activities in China, ŠKODA has relied on cooperation with Shanghai Volkswagen. We are very proud to have won again, says Bohdan Wojnar. This award is no doubt a token of appreciation of the impressive development of our company, and it highlights the importance of ŠKODA for the entire Czech economy. At the same time, we see this award as recognition of the hard work put in by over 26 thousand ŠKODA employees worldwide. We will remain fully committed to our international growth also in the years to come. Established in 1994, the Czech Top 100 is a competition focused on the most important Czech companies privatised after the establishment of market economy in the Czech Republic in the early nineteen-nineties. SVW is a dependable and competent partner with whom we will continue to write ŠKODA s success story in China in the years to come, says Vahland. Forming the basis for ŠKODA s growth plans in China is an expansion of the brand s model range available in the country.

4 4 Newsletter Job rotation: Building up the competences Job rotation is a system of foreign internships by means of which employees gain new experience and expertise. It is also one of the key preconditions for promotion to management positions. New know-how is a reason why people from ŠKODA AUTO travel abroad and, on the other hand, employees based outside the Czech Republic come to work in Mladá Boleslav. Foreign missions are designed for both individuals or whole teams, which applies mainly during the launches of new models. As part of the Volkswagen Group, ŠKODA AUTO often takes part in development activities in foreign plants. The goal of this strategy is internationalisation, says Jiří Drbout from VPF Vehicle Production Planning, and goes on to say: As the patron of the plant in Nizhniy Novgorod in Russia, we are responsible for local production and planning we are their parent plant. That is one of the reasons why our people travel to Novgorod to work in the local plant. The other reason for changing the workplace and often also the position is career development. An employee who demonstrates high competence in a plant abroad is prepared to climb up the ladder in his parent plant at home. People are often promoted to higher positions already at the point of leaving abroad, and foreign experience is a precondition for promotion to management levels. Foreign missions are part of the company s Growth Strategy. It has been the brand s long-term policy since it became part of VW and one of the pillars of its development, concludes Drbout. Employees gain new experience through internships between Mladá Boleslav and Nizhniy Novgorod. A job abroad is a career development opportunity The job rotation will support experience sharing between brands Milan Tirala has left Mladá Boleslav for Nizhniy Novgorod. What exactly do you do? What is your After less than one year of position in the company? travelling back and forth I work in the Production Launch Management Division and, in cooperation with my col- making a contract with VGR. we agreed on the job rotation concept and on leagues from VGR, I am involved in launches of new models in the Nizhniy Novgorod plant. My Will you make use of your foreign experience key responsibilities include planning and coordinating the production of pre-series vehicles, I have enhanced my expertise across the en- in your future work? and I am also involved in the organisation and tire vehicle production process and have gained management of internal interactions and negotiations concerning launches of new models. launches (ŠKODA Yeti, ŠKODA Octavia, VW Jetta) extensive experience by being involved in three Last but not least, I put together source materials for pilot hall communications and I am in- production of all of these three models within just in a new foreign plant we successfully launched volved in the overall organisation of the respective meetings. Project Management in Production, so I will be six months. I will return to where I came from, i.e. able to make use of all my experience of managing new model launches. I will also make use of my How did you get to the job rotation programme? new experience in accomplishing my personal career goals. In addition, I very much appreciate the All the credit goes to my previous boss Marek Jancák, Head of V3 in Mladá Boleslav, chance to meet many new people, particularly in and Petr Linhart, Head of the VGR plant in Nizhniy Novgorod. First I got an offer to manage which five plants in total were involved (VW WOB, managing the launch of the VW361 Jetta project in the SK316 Yeti project, production site Nizhniy VW Mexico, VGR Kaluga, VGR Nizhniy Novgorod Novgorod. I managed the project from Mladá and ŠKODA). A job abroad is a great career development opportunity that I certainly Boleslav, but I had to travel to Russia very often. recommend. Vadim Grachev has taken the opposite direction to that chosen by Milan Tirala he is going to work in Mladá Boleslav until the end of January What is your position in the company? I am part of the V3 team we plan and coordinate the production of pre-series vehicles, i.e. quantities, engine types and production standards. I could say that I am going to get familiar with the first part of the planning process here in Mladá Boleslav and then with the second part in Nizhniy Novgorod. The whole mosaic is now put together. How did you get to the job rotation programme? There were two reasons as a fresh university graduate, I needed more experience. I started as a member of Anlaufmanagement in Nizhniy Novgorod and then I went to Mladá Boleslav to V3 to work as an IPD specialist in the launch of the B8. The other reason was that Milan Tirala, a Mladá Boleslav-based specialist from V3, came to Novgorod, and I could take over his position at ŠKODA AUTO. Will you make use of your foreign experience in your future work? In the early stages the number of Czech, German and Mexican specialists in Nizhniy Novgorod was larger than that of their Russian counterparts, and therefore one of the goals of the GAZ project was to share experience with the Russian colleagues and train in-house specialists for the production in Novgorod. When the year I am going to spend in Mladá Boleslav is over, I will return to Nizhniy Novgorod as a competent specialist with extensive experience. One of the tasks of the VW Group is to ensure experience sharing between the respective brands and establish uniform process in the various plants and production lines worldwide, and the job rotation programme is one of the ways of accomplishing that. I recommend it to everybody. From Boleslav to Spain, China and Russia Three key managers from the Production and Logistics Division - Pavel Radda, Milan Staněk and Christian Meier are leaving to take on new challenges in the VW Group s foreign plants. Pavel Radda (middle) is moving to Russia. Board Member for Production and Logistics Michael Oeljeklaus has thanked them for they d done in Mladá Boleslav: You are great ŠKODA guys in terms of both professional competence and personal qualities, and you have been an asset for our brand for many years, thanks to the excellent performances you ve been putting in. However, good people are in demand across the Group, particularly at times like these, so while one of our eyes is weeping, the other one is laughing. We are all glad that you competence is sought-after in the VW Group and that you can climb one step higher on your career ladders. Christian Meier is leaving after three years. He came to ŠKODA AUTO from the Volkswagen Group where he d been working in various positions in Production from 1993, and not only in Europe, but also in Brazil and China. He was Head of the Rapid project at ŠKODA AUTO. Now he will become Head of Production Launch Management at Seat in Spain. Milan Staněk has been an employee of ŠKODA AUTO for 21 years and two months, and Head of the Engine Production Department for the last seven years, over which time the brand has produced about 7.5 million engines and launched production of the DQ 200 gearbox in Vrchlabí and the EA211 engines in Mladá Boleslav. Now he will take over as Head of Engine Production at Volkswagen Powertrain in China. After 38 years at ŠKODA, Pavel Radda is one of the brand s legends. He has been holding a variety of important positions in Production since 1990 (first as Head of the Vrchlabí Plant, then Head of the Mladá Boleslav plant from 1995 and in 2000 assumed responsibility for vehicle production in all of ŠKODA s plants), and ŠKODA has produced about 11 million vehicles, launched 13 new models in its Czech-based plants and substantially increased its quality and productivity levels across its plants over that period. Pavel Radda will now become Vehicle Production Director at Volkswagen Group Rus. The farewell party included a charity collection the proceeds of which will be donated to two foundations: Centre 83 that provides social Christian Meier is leaving for Spain. Milan Staněk (right) will work in China. services to handicapped people and Filadelfia whose mission is to find safe homes for family-less children.

5 Newsletter 5 Third model for Nizhniy Novgorod: new ŠKODA Octavia The project is based on cooperation among ŠKODA, Volkswagen and GAZ. On 21 June, 2013 ŠKODA AUTO launched production of the new-generation Octavia in the GAZ plant in Nizhniy Novgorod, Russia. After the ŠKODA Yeti, the Octavia has become the second ŠKODA model to be manufactured on the local production line, together with the Volkswagen Jetta. Our ambition is to grow substantially in Russia in the coming years. The launch of production of the new-generation ŠKODA Octavia is therefore an important milestone, says ŠKODA Board Chairman Prof. Dr. h.c. Winfried Vahland. ŠKODA Board Member for Production and Logistics Michael Oeljeklaus adds: The launch of production of the new Octavia is another major step in our strategy aimed at positioning ŠKODA as a manufacturer producing cars locally. ŠKODA has been growing impressively in the Russian market the number of vehicles delivered to Russian customers grew more than thirty-fold over How important is the Russian market for the brand and what is it like to live and work in Russia? For answers see the following articles brought to you by ŠKODA Mobil directly from Nizhniy Novgorod. The Czech culture is close to the Russian people The Russian Federation is ŠKODA AUTO s third most important market after China and Germany. Last year the Czech-based brand nearly reached the threshold of 100,000 sold vehicles and its market share grew substantially to get well over 3%. The Russian automotive market is growing dynamically, and the total number of 2.7 million vehicles that were sold in the country last year is a great promise for the future. Regional Director for Russia and CIS Miroslav Kroupa talks about how ŠKODA is doing in Russia and what activities the brand is engaged in. The fact that the Russian market offers a great potential for growth is apparent at first sight. But what makes it so important to ŠKODA AUTO? The Russian market is highly important, because we not only sell our vehicles in Russia, we also produce them locally in two plants Kaluga and Nizhniy Novgorod. In addition to that, as the biggest East European market, Russia substantially influences the way ŠKODA is looked at by customers in the surrounding countries. In other words, if ŠKODA vehicles succeed in Russia, they will also be successful in the other post-soviet countries which, considering their populations, are certainly not markets to be seen as unimportant. Moreover, the buying power of Russians is growing, and mainly people in cities can afford more expensive and well-equipped cars, i.e. the country is no more a developing market. What - in your business plans for Russia - is the role of the new Octavia that the brand recently started producing in Nizhniy Novgorod? The Octavia has always played an important role in the Russian market, for two reasons. Generally, the Octavia is a perfect car in terms of roominess and the price/value ratio. And Russia is a market where status symbols, including the look and size of your car, are considered highly important. The Octavia has been accounting for over 50% of ŠKODA s sales in Russia over the last few years, and Russia is the world s second biggest market for the Octavia (after China). We expect the new model to represent an equally important share of our sales, although we will continue extending our product portfolio in Russia substantially. The response from local media has been very positive, too in particular, they appreciate the timeless look, the new engines, the innovative technology and the price that has not changed as compared with the previous-generation Octavia. What is ŠKODA s overall image in Russia? ŠKODA was not really a well-known brand in Russia in the past. Our vehicles were sold under the Laurin & Klement brand in Russia in the early last century and then the sales more or less ceased to exist. The brand reappeared in the market after ŠKODA is seen as a brand that offers robust, highquality vehicles at an adequate price, with a variety of sophisticated details and solutions. And ŠKODA vehicles are also considered to be more than suitable for the local roads the quality of which is often poor. The brand awareness in Russia is not as high as that in Central Europe, but ŠKODA comes from Miroslav Kroupa: Russia is a market where status symbols such as the look and size of your vehicle are considered highly important. a country whose culture is close to that of Russia and that is well-known to Russians, because many of them spend their holidays there, and that is why Russian customers seem to have a positive affection for Czech cars. Yet increasing the brand awareness is one of our key tasks in Russia. In what form is ŠKODA AUTO present in the Russian market? The entire VW Group is represented by VW Group Rus that coordinates the production and sales of vehicles, as well as spare part deliveries and procurement of locally-manufactured parts required for the production. ŠKODA AUTO is a direct shareholder in this company its share is 16.8%, the remaining portion is owned by Volkswagen. We have two production plants in Russia. One of them is in Kaluga where we supply some of the parts as CKD, and a large number of parts used in Russia have already been localised. Kaluga is a full-cycle operation, including welding, painting and assembly. The plant currently produces the Fabia, and we are planning to add the Rapid (full CKD cycle) next year. The approach chosen in Nizhniy Novgorod (in cooperation with VW Group Rus) was different we needed quickly available production capacities and we got them from GAZ, a well-established Russian car manufacturer with a history of over 80 years of automotive production. We have managed to launch SKD production (and later CKD production) of the ŠKODA Yeti, along with the VW Jetta, within just 24 months from the contract signing and we launched production of the new-generation ŠKODA Octavia last month. As for the cooperation format, ŠKODA and VW supply parts, GAZ assembles the vehicles and our employees perform 100% end-of-line quality checks. The partnership with GAZ is a unique project in the entire history of the VW Group and it is a big challenge for all the parties involved. What are the key benefits of the partnership with GAZ for ŠKODA AUTO? The key benefit of our cooperation was and still is quick access to production capacities in Russia, i.e. we did not have to build new plants with all the related infrastructures. Another major factor is the location of GAZ the plant is in the middle of one of Russia s most important automotive regions, i.e. there is a large number of potential suppliers in the immediate surroundings. Another advantage of our cooperation with GAZ is a sufficient number of properly qualified people in the automotive industry, and the uniqueness of this partnership is a great source of experience for the whole VW Group. In Nizhniy Novgorod we have over 60 full-time employees from the Czech Republic (FSE, IPD, residents) and over 100 colleagues coming continuously to provide production launch support. Our people will gain valuable experience that they can make use of back in the Czech Republic or on some other projects in other countries.

6 6 Newsletter Hard work on a unique project The bird s eye view of the GAZ plant in v Nizhniy Novgorod shows roofs of several production halls that, in contrast with the other buildings, shine like strips of white gold in a sea of grey steel. Although these halls belong to the GAZ Group, like the rest of the plant, they are different in some way they are used by VW Group Rus that has given a special touch of brilliance, and not only outside, but mainly inside. The production lines produce new vehicles in a 146-second rhythm (ŠKODA Yeti, new ŠKODA Octavia and VW Jetta), and the GAZ employees that attend them use parts and partly also technologies supplied by VW Group The ŠKODA Octavia for the Russian market is now produced in Nizhniy Novgorod. believe that it will all settle down, but it will take some time and we still have a lot to do in this respect. Another challenge our colleagues in Russia are facing is component localisation required by Russian authorities. At the moment our biggest suppliers come from the Czech Republic, Germany and, for the VW Jetta, from Mexico, says Oliver Grünberg. My heart is bleeding whenever I see how many containers are transported from Central America. It is not simple to find local suppliers, though. The Russian car Russian customers look at cars produced in Russia. Russians simply do not believe that they are able to produce high-quality cars, says Petr Linhart and Oliver Grünberg continues: Russian customers still believe that a car imported from Europe will be better than the same model produced in Russia. Our task is to persuade them that the contrary is true. The quality supervision in Nizhniy Novgorod is highly consistent. Inspectors from Mladá Boleslav and Wolfsburg come to the plant every week and their conclusions show that the quality of the vehicles produced in Russia is on the par with those produced in the parent companies. Rus, a joint-stock company owned by Volkswagen and ŠKODA AUTO. The parts and components, however, are not the only resources provided by VW Group Rus. Even more important is know-how provided by experts from the Czech Republic, Germany, Mexico and several other countries that the people involved in the Nizhniy Novgorod project come from. The cooperation with the Russian partner is unique in many respects, and there is no similar partnership throughout the VW Group. The contract between VW Group Rus (VGR) and the GAZ Group was signed on 14 June, 2011, and the project was then launched and implemented very quickly. The first milestone, the Yeti SKD assembly, was reached (incredible) 4 months after the contract execution and remained in place until November Today, two years after the start, the Nizhniy Novgorod production cycle includes a welding shop, painting shop and assembly line that produce CKD ŠKODA and VW vehicles in everyday threeshift operation. The plan for the rest of the year is to reach a production capacity of 440,000 vehicles/year. Difficult beginnings As is often the case with similar projects, the beginnings in Nizhniy Novgorod were not easy. I couldn t believe my eyes when we saw the plant for the first time, says Petr Linhart, Head of the GAZ project in Nizhniy Novgorod. For example, the welding shop was like a black cell, with skylights so dirty that no light could get in through them. Inside were some machines and a few employees. We had to pull down the whole interior part of the hall (built in the nineteen-thirties) and completely rebuild it. Today the local welding shop is no doubt the most modern facility of its kind in Russia. Investments made by VGR and GAZ included modernisation of the painting shop and partly also the production line. The line is unique in that it is installed on altogether three storeys of the production hall. It was used for the production of the latest model of Volha, so it was in reasonable condition. The logistics had to be redesigned completely, because GAZ did not really have a system of sub-suppliers in the past. The credit for starting this project and implementing it within such a short span of time goes to the fulltime employees working here, as well as our colleagues from Logistics, Production, Production Launch Management, Development, Procurement, IT and many other departments and units at ŠKODA AUTO and VW who provide continuous support, says Linhart and goes on to say: I believe that this success is based on commitment and hard work put in by the entire team, as well as Czech cleverness and sense of improvisation. Oliver Grünberg, the other Project Manager, adds: It is our shared obligation to thank all our colleagues and those who are helping to shape this project, because this success is a result of teamwork, no individual could move so many things forward. Different environment Now when the situation on the technical side has stabilised, the team is facing new challenges. Perhaps the biggest challenge at the moment is staff training, because our employees have to be able to perform their tasks correctly, says Oliver Grünberg. The speed at which we started this project is taking its toll. We can see now that the qualifications of the GAZ employees are not really sufficient and there are many things that need to be improved. The transition to new technologies was a huge change for the local people. We must bear in mind that up until recently the plant was producing vehicles built on 40-year-old platforms. Lack of experience is not the only problem, though. We also see different working habits here. It is not easy for the local employees to adapt to the process-oriented culture that we have brought here. We Oliver Grünberg: Quality supervision in Nizhniy Novgorod is highly consistent. manufacturers were used to producing all their components internally, including the smallest screws. As a result, there was no space for building a sufficient network of suppliers, although the situation has been improving lately. At the moment local suppliers provide us with e.g. seats, an exhaust system supplier was established right on the GAZ site, and the Procurement Division is in the middle of negotiations with a supplier of windscreens, glass parts and other components, adds Petr Linhart. We would never change this The VGR employees also have to cope with quite a funny paradox the way Petr Linhart: I couldn t believe my eyes when I saw the plant for the first time. Considering all the work the team of employees in Nizhniy Novgorod has already done and also all the work that needs to be done, it is only logical to ask: how is it possible to manage such a company with such a small number of people? Well, projects like this take emotional strength and nerves of steel, says Petr Linhart. On the other hand, the hard work put in by the whole team produces quick results, which leads to high satisfaction. You can see that all our employees are very proud of their results and achievements, and when you ask them if they would go for a project like this again, their answer is clear: without hesitation!

7 Newsletter 7 The favourite vehicle for GAZ s staff is the ŠKODA Yeti. GAZ employees love ŠKODA Yeti Bo Inge Andersson - President and CEO of GAZ Group and a highly respected figure in the automotive industry. Automotive News Europe magazine names Mr. Andersson a Eurostar of the automotive industry in the emerging market category.his signature is on the contract that formed the partnership with VW Group Rus in Nizhny Novgorod. Mr. Andresson was appointed Honorary Consul of the Kingdom of Sweden for Nizhny Novgorod last year, and was recently bestowed with the Title of Honorary Citizen of Nizhny Novgorod, which shows his strong relationship to the region. Mr.Andersson, tell us, how does the businessman from Sweden become a president of a company based in Russia? I ve lived outside of my country for more than 20 years, of which more than 15 years in the U.S. with General Motors. When I looked for opportunities beyond General Motors, Russia seemed to be one of the most interesting places to consider. It was actually good timing, as GAZ had a lot of problems at the time, and I wanted to try something new. These two things came together, so I started here at GAZ Group in June How did you get used to the Russian environment? I was born in 1955 and raised in Sweden, which means that I have a broad historical view of the socialist environment. Generally, I would say the culture in Sweden and in this part of Russia are not very different from each other. There are some really friendly people here in Nizhny. Also, being from Sweden, I am used to the strong winters. Of course, we also have great summer weather, which is something I certainly enjoy. Czech people know GAZ mainly from the past. How is the brand now? If you take GAZ as a group, we have 13 plants and own 15 brand names. Very well-known brands include our heavy duty all-wheel-drive trucks - Ural, we have also four bus plants and many other brands. But, the strength of GAZ brand is mostly derived from our light commercial vehicles and light duty trucks. That is where we are focusing. Nowadays, we are launching Gazelle Next, our flagship product, designed for the Russian environment and Russian roads. We position GAZ as the best solution for Light Commercial Vehicles and Light Duty Trucks, for Russian conditions, as well as for former Soviet states and emerging markets. What means the partnership with VW and ŠKODA for GAZ? Our people are very proud to build ŠKODA vehicles. ŠKODA is well known in Russia. The favourite vehicle for our staff is the ŠKODA Yeti. Today, 100 of our 150 company cars are ŠKODA Yetis. We are very familiar with this model, because we ve built it for more than 1,5 years now. Our people really love this product. Now we are getting used to the new Octavia, but it s too early to Bo Inge Andersson, president and CEO of GAZ Group say anything more. We are also very proud to build the VW Jetta. However, the favourite product among our employees remains the ŠKODA Yeti. What is your personal experience with ŠKODA cars? I ve had the opportunity to participate in test drives and - as I said before - we also have the ŠKODA Yeti as a company car. I think it s a very practical vehicle, good looking and my overall experience with this car is very positive. ŠKODA s transformation through the years has been quite impressive. We certainly benefit from the partnership with you, and from my perspective the cooperation works extremely well. They key is in adapting to the local culture We are weaving our way through cars while more and more people keep joining the two lanes of traffic. Some are sweeping the shoulder, others are turning off and blowing the horn, although the traffic lights are at red again. We are in Nizhniy Novgorod, Russia s fifth largest city, and driving here is certainly not a pleasure cruise. Behind the steering wheel of his company car is Petr Novosad who is responsible for Production Launch Management here in Russia. Poor beggars, they are going to spend quite a few hours here waiting for the police, says Novosad in reaction to an accident that has completely blocked the traffic on a busy street and the cars involved in it need to be taken aside by a police patrol. We are going up a steep hill, away from the Oka River that enters the much bigger Volga River not far from here. We have left the district of which the GAZ plant is an integral part and now we are approaching the historical centre that is inhabited by a vast majority of the employees sent to this place by ŠKODA. Basically, we nearly all live in one street, says Petr Novosad. We have stopped in front of a tall, modern residential building and Petr is about to take us for a tour of the city centre. Nizhniy Novgorod was founded in 1221, on a hill above the junction of the Volga and Oka rivers. The original fortification is still in place and the view of the river it offers is impressive. We are going down the only pedestrian zone in the city and I learn that Russian cities that have completely closed pedestrian zones can be counted on the fingers of one hand. I appreciate the fact that Petr lives near the city centre. It hasn t been always like that, though, says Petr. At the beginning we all stayed at one hotel and we also worked there. When we moved to our own flats later on, we lost that kind of out-of-work contact in a way. On the other hand, we could bring our wives, partners and children here. Petr Novosad with his girlfriend in the streets of Nizhniy Novgorod When I want to know what family rier a foreigner seeking a job in Russia life in Nizhniy Novgorod is all about, has to obtain a large number of various I have to ask Head of the GAZ project permissions and documents and meet Petr Linhart who lives here with his a variety of requirements. Most of the wife and two kids. This project is an Czech wives and husbands therefore opportunity not only for us, but also stay at home and look after children who for our families. We will get familiar have to cope with the differences between the Czech and Russian curricula. with a different culture, although not a distant one, and we have a chance to Classes start at 9:30 AM and end shortly learn a foreign language and also learn before 5 PM every day. The children to live in a different environment. spend most of their summer holidays (3 Nearly all of the Czech employees months in Russia) in the Czech Republic. have their partners in Nizhniy Novgorod, Shopping is a story of its own. You and it is not really easy to find jobs for can buy all the things that you can them. The language is not the only bar- buy in the Czech Republic, says Petr Novosad. Moreover, for example the choice of food is perhaps even better than back home. But you need to be prepared to pay some extra if you want to stick to your favourite brands sometimes twice as much. Nearly all services are expensive. On the other hand, petrol and diesel are substantially cheaper. When leaving the GAZ plant, we are making sure to set out early enough. You have to be prepared for anything in Russia and it s always good to start your trip with a sufficient time cushion, says Petr Novosad. We can soon see what Petr meant - three small lorries get ahead of us at the plant gate and their check takes nearly 20 minutes. I decide to walk through the gate and I am also screened very thoroughly. Checks are omnipresent in Russia. The question whether it has any effect in terms of safety is for Petr Linhart again: Basically, the city is safe, but it s like anywhere else, a lot depends where exactly you go. Generally, it is important to adapt to the local rules and the different culture and habits. If you do that, your life in Russia can be quite pleasant, especially in a wellestablished city like Nizhniy Novgorod, concludes Petr Linhart.

8 8 Newsletter Rallying legend Loix triumphs for ŠKODA in Belgium Belgian rallying legend Freddy Loix secured a superb victory for ŠKODA on home soil. Despite coming up against challenging weather conditions, the 42-year-old celebrated with co-driver Frederic Miclotte in the Fabia S2000 an impressive start-to-finish victory at the FIA European Rally Championship s (ERC) sixth race of the season. Loix laid the foundations for this most recent triumph on the first two days. ŠKODA, spearheaded by the Czech duo of Jan Kopecký and Pavel Dresler, also leads the way in the ERC overall standings at the halfway point in the season. The dream team is back. I m absolutely delighted with my eighth victory in Begium and my third in the ŠKODA, said Loix. It was not easy keeping everything under control. But With 20 stages covering kilometres in total, Belgium s historic rally is the longest in the ERC s calendar. we found a good rhythm and stayed focused. The car was fantastic. After successes in 2010 and 2011, this was Fast Freddy s third victory in the ŠKODA in front of a home crowd. Loix laid the foundations for this most recent triumph on the first two days. After taking top spot in the first ever qualifying stage to be staged in Belgium, Loix went on to win five of the six stages on day one. Going into Saturday with a healthy lead of over a minute, the experienced pro avoided taking any unnecessary risks to secure an outstanding victory in slippery conditions. At times, it was quite tricky as it was wet out there. But I always felt good driving the ŠKODA and didn t make any mistakes, said Loix. In the end, the Belgian finished ahead of the Frenchman Bryan Bouffier by a clear margin. With covering kilometres in total, Belgium s historic rally is the longest in the ERC s calendar. Loix and co-driver Miclotte s place in the rally would not have been possible without the support of ŠKODA Belgium. A big thank you to all the mechanics and everyone else at ŠKODA Motorsport for their great support. I d also like to thank ŠKODA Belgium, said Loix. Jan Kopecký and Pavel Dresler have already raised a few eyebrows when demonstrating the ŠKODA s blistering pace on a variety of road surfaces. From the four ERC races the pair has been involved in so far this season, they have celebrated victory in Austria, on the Canary Islands and on the Azores; the ŠKODA duo also took second place on Corsica. With 146 points, the Czech pairing head the field at the season s halfway point. Next up in the ERC is the Romanian Sibiu Rally taking place from 25 to 27 June. In 13 years, about 25 times around the Earth A ŠKODA Fabia 1.9 TDI 74 kw (101 PS), which was built in the year 2000, has reached one million kilometers! Its owner, Peter Kirchhoff, from Sprockhövel near Wuppertal, meticulously planned this moment for a long time: He pulled up his Fabia to the company museum in Mladá Boleslav. With great precision, the odometer displayed the sensational reading of 999,999 kilometers. At the historic site, Kirchhoff was welcomed and congratulated by ŠKODA representatives and was enthusiastically celebrated by numerous German fans of the Czech brand who had accompanied him on his trip. Together with Peter Kirchhoff, we are delighted about this great achievement. At the same time, we are very proud that he has reached such a result with a vehicle of the ŠKODA brand. Noone can wish for better evidence of the quality and reliability of our cars, says Dr. Martin Hrdlicka, the representative of the Technical Development Department at ŠKODA AUTO a.s.. At the time, Hrdlicka collaborated in the construction of the first generation Fabia. Even at the time of its presentation at the Frankfurt Motor Show in 1999, the Fabia caused a stir, he says. The very same year, we won the first Golden Steering Wheel award with it. For us, it was the confirmation that we had the finger on the pulse of the time with this car. That piece of news, as well as the unanimous praise of the trade press, the affordable base price of DEM 18,798 in those days and the headline Bestin-class in insurance ratings tipped the scales for Peter Kirchhoff to decide upon a Fabia. On July 3, 2000, he received the key to his silver-colored ŠKODA Fabia. When I picked it up, the odometer read eleven kilometers, Peter Kirchhoff remembers. Since then, the business graduate has logged every kilometer driven and every cent spent on the car. At the time, I never dreamed of reaching the odometer reading of one million kilometers exactly 13 years to the day of accepting the car, he smiles. It is also thanks to his painstaking accounting that the entire life of the vehicle is Peter Kirchhoff presented his Fabia in front of the company museum. documented so precisely. ŠKODA AUTO Germany has been in regular contact with Peter Kirchhoff since 2005 when he first sent a letter to the editing staff of the customer magazine Extratour, which has been reporting every one of his records ever since. Peter Kirchhoff and his Fabia crossed the 500,000 kilometer threshold in July In those seven years valiant Fabia was for him reliable partner: Even after having driven half a million kilometers, I still had the first exhaust under the car, Kirchhoff gushes. Passing a general technical inspection with this car did not cause me any big headaches! Defects? Not here! For years, the ŠKODA service partner Betgen & Potthoff in Hamm has been taking care of Peter Kirchhoff s Fabia. During the preliminary check prior to the obligatory TÜV inspection in June, the car was once again given a close examination. The experienced master mechanic Werner Potthoff was excited about the overall condition. The car has stayed very young and is in top condition, especially regarding its exterior. If you wouldn t know that it has actually covered almost a million kilometers you wouldn t recognize that right away. The service advisor Matthias Lütkhoff: The car is in its With exactly 999,999 kilometers on the odometer of his ŠKODA Fabia Peter Kirchhoff arrived at the ŠKODA Headquarters in Mladá Boleslav. original condition. The exhaust, engine, clutch and transmission are parts that were installed by the factory. Thanks to regular maintenance the vehicle has achieved this enormous mileage, says Lütkhoff and adds with a grin: By now, we know every screw by its first name. To make sure that there won t be any issues during the general technical inspection on July 1, the brake discs and brake pads were replaced at the ŠKODA service partner in Hamm. Afterwards, the Fabia immediately received a new sticker. His car only let Kirchhoff down once during their long relationship. At 305,000 kilometers, a porous wire harness caused a breakdown on the road, Kirchhoff remembers.