Volkswagen-owned Skoda Auto Monday launched its second model, the Fabia sub-compact car, in China as it expanded its presence in the world's second-largest car market.

Analysts said because small cars with better fuel efficiency and lower prices are growing in popularity, the move may help Volkswagen grab a bigger share of the market in China and battle the slowdown in sales amid the global financial crisis.

The Skoda Fabia, or Jing Rui in Chinese, produced at Volkswagen's Shanghai venture, will be available with an engine capacity of 1.4-liter or 1.6-liter and will sell for between 81,900 yuan (US$11,954) and 117,900 yuan in five configurations.

This is the second strategic model that Skoda has brought to China after the launch of the Skoda Octavia sedan in June 2007. Fred Kappler, Skoda's board member for sales and marketing, said the production of the Fabia in China means Skoda has grown at top speed in the Chinese market.

Overseas car makers are counting on emerging markets like China and Russia to help them survive the weakening demand in North American and Europe.

But car sales in China have declined in three of the past four months because of the global economic slowdown.

"The small car segment will continue to see growth as Chinese consumers become more aware of energy-saving," said Tan Jijia, an analyst from Pacific Securities Co Ltd. "In the midst of economic downturn, they also intend to scale down the model they buy," he added.

China's passenger vehicle sales for the first 10 months rose 10 percent from a year earlier, according to Automotive Resources Asia, a division of JD Power and Associates. This compared to a 22-percent increase in the sub-compact car segment with the influx of new models including Toyota's new Vios, Yaris and Honda's new Fit.

"The release of Fabia will add further to Skoda's product portfolio in China and enhance its reputation," said Zhang Hailiang, sales and marketing executive director of Shanghai Volkswagen Automobile Co Ltd. "It will provide momentum for stronger growth in the future."

Shanghai Volkswagen has sold 450,000 units for the first 11 months this year, compared to its record 430,000 units last year. The company expects overall vehicle sales will remain flat next year but that its growth will outperform the industry average.

The Skoda Fabia, aimed at consumers aged between 25 to 36, received more than 1,500 pre-launch orders since November.

(Shanghai Daily December 23, 2008)