Analysis of the Automotive Industry in the Czech Republic
24. 6. 2013 | Source: EU Office ČS, a. s.
The automobile industry is very important for the Czech Republic and is one of the traditional drivers of the Czech economy, not only because it employs a lot of people, has a long-term tradition and regularly produces more than a million vehicles, but also because of its position within Europe. Even despite the relatively small size of our country and economy compared to other member states, the Czech Republic's developed automobile industry is not losing pace, but is even remaining ahead, according to some indicators.
These indicators include the number of produced vehicles and the share of employees in the automobile sector in relation to the overall work force. The share of gross added value in the automobile industry in relation the overall added value for all sectors in the national economy has long enabled the Czech Republic to rank in the highest positions compared to other EU states. Even despite the economic crisis, the automobile industry has been maintaining its importance, and if the anticipated economic recovery occurs next year, it will be not only for the industry, but also for the Czech Republic a new impulse for growth and increasing of the Czech Republic's position on the European market and elsewhere.
Czech automobile production
From 2001 to 2012, just under 10 million personal vehicles were manufactured in the Czech Republic. Between 2001 and 2004, annual production remained stably at around 450,000 vehicles, and as of 2005 production grew sharply due to the arrival of new automobile production plants to the Czech Republic (TPCA in Kolín and Hyundai in Nošovice). The most personal vehicles were produced in the Czech Republic in 2011, 1,195,000 vehicles, double the quantity in 2005. Most of the vehicles produced in the Czech Republic are personal vehicles, which make up 99 % of all motor vehicles produced in the Czech Republic.
Development of the production of personal automobiles in the Czech Republic
Produced personal automobile brands in the Czech Republic in 2012
The remaining approximately 1 % is divided among production of buses, service vehicles and motorcycles. However, in 2013 the automobile industry has been fully affected by the economic crisis, and during the first quarter of the year only 285,715 vehicles were produced, an 18.14% decline in production compared to the first quarter of 2012. All three large automobile firms in the country registered production declines.
Four personal automobile manufacturers have a presence in the Czech Republic. According to the Automobile Industry Association's data from 2012, the most vehicles were produced by Mladá Boleslav-based Škoda Auto 656,306 vehicles), giving it a majority 55.9 % share of all produced personal vehicles in that year. Hyundai has also been successfully producing vehicles in the Czech Republic. In 2012 it produced 303,035 personal vehicles. The joint venture of Toyota, Peugeot and Citroen in Kolín produced just under 200,000 automobiles. The small Czech manufacturer of sport roadster vehicles, Kaipan, has the smallest share of the market of produced automobiles (0.001 %).
Czech automobile market according to registered vehicles
According to data from the Automobile Industry Association, for the period from 2003 to 2012 a total of 1,471,180 newly produced automobiles were registered in the Czech Republic. A total of 1,533,307 imported used vehicles were registered for the first time during the same period. The registration of imported used vehicles grew the most between 2006 and 2008 (an average of 209,000 registrations), and the most were registered in 2008 (230,974 vehicles).
Development of personal vehicle brands according to the number of first registrations in the CR
In the last four years, we have observed increased numbers of registration among newly produced vehicles, which indicates that people are more interested in new vehicles than used ones, while the opposite situation was true previously. The turning point was 2008.
Development of the number of first registered personal vehicles
According to the most recent data, a total of 298,352 personal vehicles were first registered in the Czech Republic in 2012, of which 174,009 were newly produced and 124,343 were imported used vehicles.
It is interesting to observe the development of personal vehicle brands according to the number of first registrations in the Czech Republic. In 2001, just under 80,000 Škoda brand vehicles were registered, giving that brand more than a 50% share of all registered vehicles on the Czech market.
Other brands fared worse than Škoda in the share of registered brands. However, if we move a few years, specifically to 2012, we can notice a change at first glance. Although the most registered vehicles were again of the Škoda brand, its dominant market share, 30.9 %, is not nearly as large as it was in 2001. Volkswagen, Hyundai, Ford and Renault have been catching up to Škoda, and their individual shares of the overall number of first registrations range from 6 % to 8.7 %.
Hyundai in particular has jumped a few percentage points forward. While in 2001 Hyundai vehicles made up only 1 % of newly registered vehicles, that share was 8.7 % in 2012. The jump is certainly related to the opening of the new Hyundai production plant in Nošovice, North Moravia, and the brand's popularity in the Czech Republic continues to grow.
Among the 15 most popular brands in 2012 compared to 2012 were South Korean Kia, Japanese Toyota as well as luxurious European brands BMW, Mercedes-Benz and Audi.
Czech automobile market according to performance and job market indicators
The development from the beginning of the new millennium has shown that the automobile industry is among the most dynamic sectors of the Czech economy.
The development of the year-to-year tempo of revenues in the automobile industry was reflected partially by the development of the economy. The Czech Republic's economy between 2003 and 2006 grew at tempos that we can only dream of today. In 2006 there was 7 % GDP growth with a subsequent decline to the "bottom" (-4.5 % GDP growth) in 2009, when the economic crisis was fully hitting. This growth and subsequent decline is also noticeable in domestic revenues in the automobile industry.
Year-to-year pace of growth in revenues in the automobile industry
However, the economic crisis has not only affected the Czech Republic, and therefore even relatively stable revenues from direct exports fell in 2009 by tens of percentage points. The economic growth a year later and a certain apparent improvement in the situation on the market restarted both domestic revenues and revenues from direct exports. However, the current situation shows that the economic crisis is far from behind us, and if we consider other impulses, including increasing of VAT, uncertainty and reduction in consumption, it certainly will not come as a surprise that domestic revenues in the automobile industry have again begun declining.
The European Commission forecasts for 2013 for the Czech Republic stagnation, which could even lead to a slight decline, followed by slight growth in 2014 in the amount of 16% of GDP in the Czech Republic and 1.4% in the EU as a whole, which may also give a boost to the automobile industry and subsequent revenues. The automobile industry, with just under 150,000 employees, is now approximately at the level it was at in 2007, when it was not yet apparent that at subsequent decline would occur not only in that sub-sector or that t here would be an economic crisis. Between 2008 and 2009, the number of employees in the automobile industry in the Czech Republic fell by nearly 15%, which represented more than 20,000 employees. Since then, the number of employees in the industry has been rising gradually, as the market has recovered.
A certain momentary problem in the automobile industry is shown by the reduction in the number of employees in the last two quarters in 2012. However, this decline is not expected to be long-term, and if the already mentioned economic recovery occurs, the situation on the job market within the automobile industry will calm down, and the number of employees in that sector could grow again.