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(Last updated: 2 Aug 2012)
Trends and opportunities
The market
The Czech Republic has a unique position in Central and Eastern Europe due to a long automotive tradition. This, together with highly skilled labour and a strategic geographic position in Europe, launched the Czech Republic to become a major European Union player and an automotive R&D centre of excellence. The industry is highly integrated into European automotive value chain.
Leading car manufacturers such as Škoda Auto (part of the Volkswagen Group), Toyota, Peugeot, Citroën and Hyundai, bus manufacturers Iveco, Sor Libchavy and truck manufacturers Tatra, Avia Ashok Leyland produce vehicles in the country.
The country has developed a strong supplier base with more than 800 suppliers from Tier 1 to Tier 3 – 46 out of the world’s Top 100 automotive suppliers are based in the Czech Republic.
The Czech Republic is one of the most attractive automotive R&D locations globally. This is due to engineering tradition, high-quality technical education and tight cooperation between universities and the industry. All these aspects have already attracted more than 30 R&D companies such as MB Tech, Ricardo, Swell, Valeo, Visteon, Bosch and Siemens to set up business in the Czech Republic.
Since 2004 – and despite of the global financial crisis – the industry has been constantly growing and currently employs over 120,000 people. In 2010 (for the first time ever) total vehicle production exceeded one million units, making the Czech Republic the second highest car production centre per capita in the world.
Czech automotive companies produced 1,072 million cars in 2010, 9.52 per cent more than in 2009. In 2011, the production grew by further 11.5 per cent to reach the country record of 1,201,000 vehicles produced in a single year. Along with Germany, France, Italy and the UK, the Czech Republic belongs to the European ‘Big Five’ car manufacturers.
(Sources: Austrade Prague; Automotive Industry Association of the Czech Republic)
Opportunities
With its strategic geographic position, Czech Republic is an excellent place for launching a greenfield production facility or developing a centre for supply chain, capable of supplying existing manufacturers, as well as those established in neighbouring Germany or other Central and Eastern European countries such as Hungary and Poland.
Benefits from being part of the Czech Republic’s automotive cluster, which features an extensive and robust value chain, availability of highly skilled and educated labour pool, developed infrastructure, well prepared industrial zones and facilities, and highly developed supplier base with strong presence of international companies were assessed by the European Investment Monitor of Ernst & Young, which ranked Czech Republic as the world’s leading location for automotive-components plants for three consecutive years.
The automotive sector is a key industry in the Czech Republic, which offers excellent business opportunities for final producers, suppliers or those in the field of technological development for R&D. In recent years, larger companies such as Škoda Auto, Iveco, Valeo, Robert Bosch, Visteon and others have been developing their own R&D capacity. Czech R&D centres and universities are open to cooperation with Australian counterparts as multiple areas of potential common interest have been identified presenting opportunities for synergy and due to the complementarity of many research and development projects.
There are also good opportunities in the aftermarket sector due to the fact that the speed of replacing used cars is relatively slow and imports of used cars (especially from Western Europe) remain high. In 2011, almost 132,000 used cars were imported and registered in the Czech Republic, which represents over 43 per cent of all registered vehicles.
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