Volkswagen Wins Skoda Bidding War : Auto makers: The German firm will pay up to $5 billion to take over the Czechoslovak company, reports say.

In a major Western investment in Eastern Europe, the German auto manufacturer Volkswagen has won the bidding war to take over the prized Czechoslovak car maker Skoda.

Officials did not say how much money Volkswagen AG was prepared to invest in Skoda. News reports have put the figure at up to more than $5 billion.

Petr Pithart, premier of the Czech republic, said Volkswagen was selected over a French-Swedish consortium of Renault and AB Volvo for the deal announced Sunday. He said Volkswagen made a better financial offer, was strong in the European market and provided better assurances for Skoda’s 16,000 workers.

Skoda is considered one of the best auto manufacturers in Eastern Europe. It had a manufacturing tradition predating communism and used its own designs instead of Western retreads.

Its cars have a relatively good reputation for reliability.

Auto manufacturing is one of the few areas in which Western industrial firms have shown a keen interest in expanding into the formerly Communist countries of Eastern Europe.

Volkswagen is to take an initial share of 25% to 33% in the Czechoslovak auto maker and gradually increase control, Pithart said.

Newspapers have said Volkswagen pledged to keep the Skoda name and to not lay off employees.

“Skoda is worth fighting for. It’s had more success in Western Europe than other Eastern manufacturers,” said Suzanne Thackray, a consultant at Britain’s independent Motor Industry Research Unit.

Annual sales of cars in Eastern Europe soon could surpass 5 million, and 10 million in another decade, she said.

Newspaper reports had placed the size of Volkswagen’s planned investment at $3.3 billion to $5.3 billion.

Reports had said the Renault-Volvo bid was worth about $2.6 billion over six years.

But some analysts had said the Czechoslovaks would be inclined to choose the French-Swedish bid to keep the company out of the hands of their powerful German neighbor.

Volkswagen and the Renault-Volvo consortium were the last survivors in a process that began in April.