Å kodaAuto ANNUAL REPORT 2006 - Skoda Auto

SHORT-TERM OUTLOOK
Financial Situation
Continual improvement of all corporate
processes together with growing sales will
create potential for continued positive
development in the financial situation.
Thanks to improved operating and
financial effectiveness and savings on
production costs combined with rising
market share in all major sales regions,
the Group anticipates that it will achieve
its economic objectives.
Model of the new Technology Centre
Czech and World Economy
Dynamic growth of the Czech economy is
set to continue in 2007. However, the rate
of growth is expected to slow slightly (real
growth of around 5.0%). GDP is to be
driven in particular by household
consumption and capital spending. The
inflation rate will likely grow to 3.1%.
Employment is expected to grow, with
a corresponding fall in unemployment.
The Czech currency is anticipated to
strengthen relative to both the Euro and
the U.S. Dollar.
Automotive Market
Czech Republic
In the Czech Republic, the year 2007 is
expected to bring an expansion of the
overall passenger car market, which could
see its volume increase by up to 8.0%.
Central Europe
Compared to 2006, demand for new
passenger cars in markets in Central Europe
is expected to remain flat. Positive
movement can be anticipated in the Polish
(year-on-year growth of 2.0%) market,
while the Hungarian market is forecasted to
decline substantially (-9.0%).
Eastern Europe
The current forecast for the overall
markets for new passenger cars in Eastern
Europe is one of growth in 2007. The most
dynamic market will be Russia (+11.0%).
Western Europe
Next year, overall demand for new
passenger cars in markets in Western
Europe is likely to fall slightly (-1.0%)
compared to 2006, primarily as a result of
anticipated declines in the German
(-2.6%) and British (-1.5%) markets. On
the other hand, the French market is
expected to improve (+4.5%).
Asia
Both the Indian and Chinese new
passenger car markets are expected to
continue to grow in 2007.
The Group forecasts that Tranche 2 of the
bond issue (CZK 3 billion) will be repaid in
October 2007. The retirement of this debt
will have a positive impact on the
Group’s financial situation, especially in
terms of increased liquidity.
Development
In the next two years, we will continue to
upgrade the existing Development Centre
in Česana and build a new technology
centre on the banks of the Jizera River
(groundbreaking on the project is to take
place in late 2006). Among other things,
the new technology centre will have space
dedicated to developing vehicle
electronics and electrical wiring,
development of undercarriages and
aggregates, acoustical and noise testing,
etc. Construction of the building should
be completed by the end of 2008, and the
technology centre itself is to be put into
operation about 6 months later, following
installation of all the new technologies.
The new centre will also carry forward
development of a new engine powered by
an alternative fuel (petrol-alcohol
mixture). Other activities will focus on
development of vehicles for markets with
high growth potential.
54