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Volkswagen Group's new strategy for Skoda is beginning to show its first results. In order to avoid competition between VW and Skoda products and to get a piece of the low-cost market, the German company’s plans for the Czech automaker include a new affordable model.

According to reports from the UK, Skoda has confirmed that the new addition will be a small sedan positioned between the Fabia supermini and the Octavia and will target developing markets. The sedan, which could be a competitor to Renault’s Dacia Logan, is scheduled for launch in 2012, but first Skoda will introduce a city car based on Volkswagen’s forthcoming Up series.

The once ailing Skoda brand is turning out to be a solid investment for the Volkswagen Group as the Czech automaker is breaking one sales record after the other. In the year that just passed on, Skoda Auto recorded is best-ever sales results delivering 762,000 vehicles, which represents an increase of 11.5% over 2009 when it sold 684,200 units. Furthermore, the company broke the threshold of three quarters of a million vehicles sold in a single year for the first time in its history.

Just today, we learned that Skoda delivered a record number of vehicles in the first nine months of 2010, increasing its operating profit by a whopping 64%. This is what most people know about the Czech automaker; that it has been a wild success since Volkswagen took over the reins of the company. But there are others -myself included- who think the real glory of Skoda lies in its past.

[Updated] This year's edition of the Paris show will see the VW Group's successful Skoda brand unveiling its first-ever electric-powered vehicle called the Octavia Green E Line. Skoda says it is planning to create a special test fleet of Octavias Green E Line in 2011 with the goal of obtaining additional information relevant to the further development of the electric drive.