doc. Ing. Tomas Dudas, PhD.

Global automotive industryOne of the most important and most

globalized industries in the world economyThis industry is undergoing major changes

from the 80s (the change of national automotive corporations into global champions)

Global mergers and acquisitions and strategic alliances (Renault-Nissan, DaimlerChrysler – which split several years later)

Global Players

GM (Cadillac, Chevrolet, GMC, Buick, Opel, Vauxhall, Holden)

Ford (Ford, Lincoln) Chrysler (Chrysler, Dodge, Ram, Jeep)

Global PlayersToyota (Lexus)HondaRenault/Nissan

Daimler (Mercedes-Benz, Smart)Volkswagen (VW, Škoda, Audi, Bentley, Seat,

Bugatti, Lamborghini, Porsche)Fiat (Alfa Romeo, Lancia, Ferrari, Maserati, Iveco)PSA (Pegueot, Citroen)

Hyundai/Kia

Automotive industry in CEEThe first attempts to construct automobiles

occurred early in the 20th century – Czech republic, Hungary

1920 – first joint venture (FIAT)Skoda corporation becomes the most

important automotive corporation in the region

After WWII the automotive industry is nationalized (with everything else) and central planning is introduced

Automotive industry in CEEŠkoda remained the most popular automobile

producer in the region, but the quality of the cars decreased over the decades

Poland produced Fiats in joint ventureHungary specialized itself as an autobus

producer (Ikarus)Slovakia did not have significant car

manufacturing capacities

Automotive industry in CEEThe fall of the soviet regime brought huge

problems into the automotive sector in CEEThe markets opened – and the domestic

corporations realized that they are not competitive enough

They needed – capital and technology – they needed a foreign investor

Most of the FDI went into the Visegrad countries

Who is active in the region?Volkswagen took over Czech manufacturer

Skoda in 1991 and over the next eight years invested more than DM2.4 billion in it. The company has also set up assembly and component manufacturing operations in Hungary, Poland and Slovakia. Its Audi division has invested in component manufacturing and assembly operations in Hungary.

Fiat began its restructuring of the Polish automotive group FSM in 1991 and acquired a 90 percent stake in it the following year.

Who is active in the region?Suzuki set up production facilities in Hungary in

1992 and invested more than $400 million in them more than the remainder of the decade.

Daewoo acquired the Polish automotive groups FSC and FSO in 1996 and invested more than $1billion in these facilities over the next two years. The firm was one of the most aggressive investors in central and eastern Europe in the late 1990s, acquiring seven formerly state-owned auto plants across the region. Since the bankruptcy of parent company Daewoo Motor in 2000, the future of many of these plants is uncertain, although General Motors has expressed an interest in investing in some of these facilities.

Who is active in the region?General Motors (through its Opel subsidiary) launched a

bid for Poland’s FSO in the mid-1990s. When it lost out to Daewoo, GM decided to make a DM530 million greenfield investment in an integrated car plant in Poland. The company has also established production facilities in Hungary.

Toyota and Peugot made the largest-ever greenfield investment in the Czech Republic in 2002, investing more than Ä1.5 billion in a car manufacturing plant. Shortly afterward, Toyota also increased its investment in its existing component manufacturing operations in Poland.

PSA Peugot Citroën signed an agreement in January 2003 to build a greenfield production plant in Slovakia. The project is valued at 700 million EUR.

Hyundai/KIA – built two factories (Kia – Slovakia and Hyundai – Czech republic)

Renault – took over Revoz in Slovenia in the early 90s, in 1999 they acquired the Dacia factory in Romania and in 2008 25 % in AvtoVaz in Russia

Daimler Benz - built a new factory in Hungary in March 2012 (A-Class and B-Class)

Privatization vs. GreenfieldPrivatization – VW (Czech republik), Fiat

(Poland), Daewoo (Poland), Renault (Rumania a Slovenia)

Greenfield – GM (Hungary a Poland), Suzuki (Hungary), Audi (Hungary), PSA/Toyota (Czecg republic), PSA (Slovakia), Kia (Slovakia), Hyundai (Czech republic)

Automotive FDI Inward Stock

0

1.000

2.000

3.000

4.000

5.000

6.000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

EURmn

CZ

HU

PL

SK

SI

RO

Why the V4 countries?Stable economic and political environmentNearness to the great markets in western

EuropeQualified labor forceLow labor costs – growing labor productivityFlexible labor marketsEU membershipAttractive investment incentives

“Our major market is western Europe, and we have chosen this region primarily because of its location, its cheap labour force and profitable government incentives.”

—Tokuichi Uranishi, managing director, European and African Operations, Toyota Motor Corporation

Where in V4?In the early 90s Czech republic and Poland were

the favourites – privatization of the existing capacities

Hungary became popular in the mid 90s – greenfield investments

Slovakia was not attractive those timesLate 90s and early 2000s – the FDI inflow in the

industry is dominated by greenfield investmentsInvestment incentives play an ever increasing

role – the offers of the competing states are often similar

Automobilový priemysel – pillar of the Slovak economy

Počet vyrobených áut na Slovensku v rokoch 2000-2012

Number of employees in the Slovak automotive industry 2002-2012