Skoda Puts Southeast Asian Expansion on Hold

In such a difficult market, expanding operations in new and unexplored markets is extremely risky, especially when taking into account that investing into new facilities may not bring anything but losses. Given this facts, Volkswagen's Czech brand Skoda considered that it would be better to temporarily suspend its plans to expand its operations into southeast Asia, a market that has annual sales of around 1.8 million vehicles, according to Autonews.

Basically, what Skoda attempts to do is to find a local partner that could help it manufacture cars using pre-built kits. Nevertheless, Skoda says that domestic automakers turned the market into an "incalculable" risk, the aforementioned source added, as they are willing to sell their cars at almost any price.

"We have put the issue aside for now in order to wait for a certain consolidation process. The market needs at least a year to correct itself before we can see which players remain in the game," Skoda Chairman Reinhard Jung told Reuters.

The ASEAN market includes several nations such as Malaysia, Thailand, Indonesia and the Philippines and has an average annual sales figure of around 1.8 million units.

As part of its campaign to help the company cope with the recession, Skoda last months announced a couple of cost-saving measures mainly aimed at aligning production with the market demand. In December for instance the Czech automaker confirmed it will stop work on Friday, emphasizing once again its efforts to protect jobs at its facilities.

Nevertheless, Skoda may after all turn to job cuts if none of its cost-cutting measures prove to be efficient. Rumors are claiming that Skoda considers a job cut of around 870 employees, or around 3 percent, of its total workforce.