Skoda is developing a new low-cost family sedan set to challenge the likes of the Logan (pictured below), a popular small sedan which is produced by Renault's Dacia subsidiary.
Skoda CEO, Mr Reinhard Jung, said the new model would cost between 10,000 and 12,000 euros (AUD$16,000 - $20,000) and would launch in two to three years.
Mr Jung did not give any further details on the car, though German press reports have suggested the new car will be positioned between the brand's Fabia and Octavia models.
The model would also be more expensive and of higher specification than the cut-price Logan which retails from 7,300 euros (AUD$12,000).
It is believed the move will help Skoda with its plans to strengthen its product lineup to take advantage of increasing sales of low-cost cars.