Do you know something VW/Skoda executives don't? I don't think so.
They are even launching Rapid's nearly identical sister, the new Seat Toledo. It's called diversification. Yes, it can lead to the so called sales cannibalization, but I'm sure they've done their homework.
Like I said, unless the Octavia gets booted out and the Rapid is the replacement
Rapid is already smaller (and will sell for less) than Octavia; they are in different car segments.