Skoda is planning to double its production capacity and sales to 1.5 m illion a year by 2018.
This will involve entering new sectors of the market, starting with a city car based on the Volkswagen Up concept next year, and a move into electric vehicles.
The plans were announced by the head of the company, Dr Winfried Vahland, at a ceremony to mark the 20th anniversary of Skodas incorporation into the Volkswagen Group.
Dr Vahland was one of a number of dignitaries to break the ground at what will be a new assembly line for the Octavia.
Octavia production to double
Octavia production is set to double to 1200 cars a day, six days a week, when the new facility is open. The range will also include an electric version.
Twenty years ago we only had the Favorit, he said. Last year we enjoyed record sales of 750,000 and we are increasingly becoming an international brand, selling in more than 100 markets.
VW Group ceo Dr Martin Winterkorn said Skoda would benefit from the strongest corporation in the industry through massive investment in new product, technologies and capacities in the next few years.