Industry Focus >>中東歐汽車產業概況與商機

I. Overview of the Automotive Industry’s Development in Major
Central and E. European Countries
Czech Rep.

Hardware & Fastener Components - no.60/2023

The automotive industry is one of the pillars of the Czech economy. More than 40 of the 100 most important automotive companies
in the world have invested in the Czech Rep. and set up branches in the Czech Republic. Their design, innovation and technology
development centers located in the Czech Rep. form a dense and complete automotive industry chain, making the Czech Rep. one of thecountries with the highest degree of concentration in automotive manufacturing, design and research and development in the world, andranked the 5th largest automotive manufacturing country in the EU in 2022. The Czech automotive industry has a history of 100+ years,
and the Czech Rep. has embraced a dense and complete automotive industry chain with 3 passenger car manufacturers and nearly
400 automotive component manufacturers/suppliers, of which 55% are foreign-invested enterprises.
The Czech Rep. has developed a number of advantages
in the passenger car, commercial vehicle and component
industries. In the automobile manufacturing and assembly
sector, the Czech Rep. has three passenger car plants, including
Skoda, Toyota-Citroën and Hyundai, of which Skoda is the top
100 Czech companies and the largest exporter in terms of tradeturnover, and is also the 3rd largest R&D center of the VWGroup worldwide; in the commercial vehicles sector, Karosa is
the largest bus manufacturer in the Czech Rep. and the leading
bus manufacturer in Europe, while Iveco Group is the second
largest bus manufacturer in Europe and has the world’s largest
bus manufacturing center in the Czech Rep. - the Iveco Czech
plant. In terms of components, the Czech Rep. has been ranked
as the world’s best place for investment in the automotive
components industry by European investment monitor Ernst& Young for many consecutive years. Half of the world’s top
50 automotive component manufacturers have invested in
the Czech Rep., including John Controls, Simens, Faurecia,
and Visteon, and in terms of component services, the Czech
International Automotive Parts and Accessories Exhibitionis the only exhibition for utility vehicles in Central Europe

072 惠達雜誌and enjoys a high reputation in Central and E. Europe. The
Czech Passenger Car Show is the largest and most influential
specialized truck show in Central and E. Europe, attracting alarge number of European and global passenger car buyers andsuppliers every year.
In 2021, after a year of intermittent shutdowns due to theepidemic supply chain disruption, production in 2022 reachedas high as 1.4 million vehicles, accounting for 85% of thetotal capacity. A large backlog of orders in 2021 drove thegrowth of production in 2022 and strongly suppressed demandalso stimulated consumption. One of the three largest Czech
automobile manufacturers, Toyota (TMMCZ established in
2002 hires 3,200 employees and produced 202,000 vehicles in
2022, accounting for about 17% of the total Czech production),ceased production in February 2023 due to the continued
shortage of key components, leading to a waiting period of
about 6-12 months for individual vehicle models. With thecontinuous shortage of supply in early 2023 and a large backlogof orders, the Czech automotive industry continues to recover,driving the economic rebound.

Industry Focus >>PolandPoland’s automotive industry has developed rapidly through large-scale attraction of foreign investment, privatization and comprehensive
restructuring, and has become one of the major producers of automotive components in Europe and a major automotive industry countryin E. Europe in a short period of time. In 2022, there were more than 1,500 manufacturers engaged in the production of automobiles andcomponents in Poland, and major car manufacturers such as Fiat, VW, Toyota, Isuzu, GM, and Volvo all have invested and built theirfactories in the country.
Poland has formed a lot of advantages in automobile andparts manufacturing. Almost 98% of Polish automobiles areexported and the largest market for Polish automobile
export is Germany. Poland is also VW’s strategic base in E.
Europe with the two most important engine factories of VW
within Europe. Nearly 50% of VW’s European production iscompleted in Poland. In terms of components, Poland produces
automotive components with high technical standards and awide range of products, and is a world leader in the manufactureof tires, seats, automotive electronics, cables & braking systems,
etc., which are widely used in the assembly of automotive brands
such as M. Benz, Nissan, Opel, Porsche, VW, Fiat, Honda, andCitroën. Important global automotive component manufacturers
such as TRW, Valeo, Delphi, Faurecia, etc. have also establishedtheir R&D centers in Poland.

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According to the report of The European Federation forTransport and Environment (T&E), which promotes theEuropean clean transport movement, Poland has the best EV
battery production capacity in Europe, with a capacity of
47GWh in 2022, significantly higher than that of Hungary(30GWh) and Germany (20GWh). Polish EV batteries havebecome an important export item for the country and Polish EV
battery sales were the highest in Europe with a value of around€4 billion in 2022, twice as much as in 2019. Polish EV batteries
have the highest value of production in the automotive industry.

074

According to the report by AutomotiveSuppliers.pl, theexport value of Polish automotive industry fell by 5.6% (EUR
28.6 bn) in 2022, with automotive components still accounting
for the largest share of exports (EUR 10.7 bn), exports of cars
valued at EUR 4.9 bn, and exports of EV batteries climbing to
the 3rd place (EUR 3.99 bn). As many automotive factories haveannounced to increase the production of EV, the production

惠達雜誌

value of the automotive industry in 2023 is expected toperform well. Poland will continue to attract foreign investors
and consider their production plants the basis for further
development of the Polish EV industry.

Slovakia
The automotive industry is one of the pillars of Slovakian
economy, accounting for 13% of its GDP, 35% of its exports,
and 44% of its total industrial production value, which occupies
a strategically important position in the economy. In 2022,
Slovakia’s annual automotive production reached 981,000
vehicles, with an average of 180+ vehicles per 1,000 people.
Slovakia’s automotive production is only second to those of
the Czech Rep. and Poland among the new EU member states.
In terms of vehicle manufacturing, Slovakia has the mostadvanced automobile assembly production lines in Europe, andmajor automobile manufacturers such as VW, Peugeot, Citroën
and Kia have invested and built factories in Slovakia. With theinvestment in the production of automobiles by the UK’s Jaguar
and Land Rover in the Sznitra region, the production capacityof Slovakian automobile industry will be further increased.
The reason that Slovakia could occupy a solid presence inthe European automotive industry is mainly due to its qualityof passenger car assembly and the ability to produce highquality parts. Slovakia has 350+ parts suppliers, of which morethan 240 are located in the western region. Slovakia is locatedin the middle of Europe, creating relatively lower transaction
costs, so major Western European car makers have relocatedtheir factories to Slovakia, thus gradually moving the European
automotive manufacturing heartland from W. Europe to theCentral & E. European region.
In 2022, 100% of the vehicles assembled at VW’s Brastislava
and Martin plants in Slovakia were exported to 180 countries,
with China, the U.S., and Germany being the top 3 export
destinations, accounting for 2/3 of its total production. The
VW Bratislava plant in Slovakia has recently begun productionof its first electric SUV (Porsche Cayenne), but market demandhas been lower than planned due to low consumer willingness
to purchase EV, a phenomenon that has also occurred inGermany. Customer orders for the German VW ID series of
SUV are much below annual targets and all carmakers (notjust VW) are experiencing a drop in orders. Slovakia is still
optimistic about the market for the electric Porsche Cayenne,
believing that luxury cars are still the company’s main sourceof profit, and echoing the company’s plans to convert the
Audi Q7, Q8, and VW Touareg models of the same group into
electric vehicles.

Industry Focus >>Hungary
The automobile industry is the main driving force of
Hungary’s economic growth and more than 1/4 of the country’s
total foreign investment in the manufacturing industry went
to the automobile industry. Among Central and European
countries, Hungary’s automobile industry has a relatively
mature market with a complete system suppor ting theautomobile industry chain. In 2022 there were 700+ automobile
vehicles, parts and components and ancillary service providers
in Hungary, of which 500 are automobile parts producers.

There were more than 470 automotive OEMs and components
manufacturers in Romania in 2022, employing more than
206,000 people; the automotive industry in Romania has beenon an uptrend in recent years, and the automotive industry was
worth about US$26 billion in 2022, accounting for about 12.7%
of its GDP, of which export of OEMs and components amounting
to 41.3%, and Daewoo, the second largest OEM in Romania, witha market share of 19.2%. In 2022, the automotive industry was

Hardware & Fastener Components - no.60/2023

Hungary has an advantage in the field of passenger cars,
assembly and manufacturing of components and exports a large
number of them. In terms of vehicle manufacturing, 80% of
its passenger cars assembled by Suzuki Hungary are exported
to Italy, Germany, the UK, etc., and the medium/low-priced
cars produced are mainly for the demand of the Central and E.
European market, such as Slovenia; in terms of components,
15 out of the world’s top 20 parts manufacturers invested
and set up factories for production and sales in Hungary,
including Bosch, Takata, etc., and Hungary is a leader
in the production of gasoline engines and is the 4th largest
exporter of engines in Europe. Bosch has built the world’s
largest production center for automotive electronic components
in Hungary, and Audi Hungary is the largest exporter (about
90% for export) and the world’s 3rd largest supplier of
12-cylinder diesel engines (for Audi Q7).
Automobile manufacturing is one of the representative
industries of Hungary. As the pillar industry of Hungary, theannual growth rate of the automobile manufacturing industry
in 2022 was 9.8%, contributing 29.3% of the output value ofthe Hungarian manufacturing industry, 91.1% of the output
value of the automobile industry was from export, accountingfor 1/5 of Hungary’s total export value. The biggest market for
the export of Hungarian automobiles and spare parts is the EU,
half of which is sold to Germany, mainly supplying Audi, M.
Benz assembly support. Foreign investment also plays a pivotal
role in Hungary’s automotive industry, with most passenger
car and engine manufacturers being foreign-invested, while
local manufacturers are mainly engaged in the production ofcommercial vehicles and automotive components. In 2022,
Hungary had more than 740 automobile and component
manufacturers and thousands of indirect service providers,forming an automobile industry chain.

Romania
Romanian automobiles occupy a higher position in theEuropean market. In terms of vehicle manufacturing, foreigncompanies have a higher market share, mainly Renault andDaewoo, of which Renault is the largest automobile OEM
in Romania, with a market share of 41.3% in 2022, andDaewoo is the second largest OEM in Romania, with amarket share of 19.2%. The automotive industry has become
the driving force of Romania’s economic development,
which, together with the IT industry and the retail industry,
are called the three major engines of the Romanian economy.

076 惠達雜誌

worth 26 billion USD, accounting for 12.7% of the country’s GDP, ofwhich exports of automobile manufacturing and components reached
US$18.4 billion, around 20.2% of the country’s total export.
Romania’s main industry is the automotive industry. Due tothe presence of automotive companies such as Dacia (a Romanianbrand, part of the Renault-Nissan Group), Ford, and Continental,

Industry Focus >>Romania ranks 10th in the EU in terms of automotive andautomotive parts manufacturing, with an annual productionof about 500,000 passenger cars in 2022 and an export valueof about US$13.2 billion. The country has more than 600
upstream and downstream manufacturers in the supply chain,producing related components such as tires, wires, conductors,
transmissions, electronic components, lights and batteries, etc.
The EU countries are its main export destinations.

The Romanian automotive parts industry is divided into 3
segments: mechanical and electronic parts, after-sales parts,and consumables & accessories. In the electric and hybrid
market, the Ministry of the Environment doubled the budgetof its Rabla Plus program for 2021, with a total value of 82
million euros to subsidize Romanian nationals’ purchaseof electric and hybrid vehicles. According to the program,
10,000 euros subsidy will be provided for each purchase of apurely electric vehicle, making Romania the country offering
the highest subsidy among EU member states. According
to EURACTIV media report in March 2023, thanks to
Romania’s EV incentive policy, 8.6% of new vehicles
purchased by the Romanian public in January-February
2023 were electric vehicles. The Romanian Ministry of theEnvironment has announced a subsidy program with a total
budget of 1.5 billion euros since March 2023 to encourage
more people to purchase EV.
The Romanian automotive components industry ismainly driven by the investment of Western European car
manufacturers, with manufacturing plants all over Romania,
including Continental AG (tire manufacturing, located in
the west of Romania), Michelin (tire factory in Zalau andFloresti), Pirelli (tire factory in Slatina), Star Transmission(transmission factory in Cugir), etc.

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Slovenia
T h e a u t o m o t i v e i n d u s t r y i s o n e o f S l o v e n i a’s
manufacturing strengths, with 180 manufacturers engaged
in the industry in 2022. The main automotive parts andcomponents include seats, interior trim, chassis, brakes,
engi nes, elect ron ic/elect r ica l components, steer i ng
systems, power train components, spot welding equipment,
transmission components, etc. Slovenian automotive
products are mainly exported (about 90%) and the main
export destinations for vehicle assembly include Germany,
Italy, France, Austria, Hungary and Southeast Europe,
while the main export destinations for automotive parts andcomponents include Germany, France, Italy, Austria, the UK,
the U.S. and Spain. In terms of components, Hella Saturnus,
Revoz, Adria Mobil, and Cimos have become component
suppliers to leading automakers such as BMW, Audi, Ford,and Toyota. In terms of vehicle manufacturing, Revoz is the
only vehicle manufacturer in Slovenia, mainly producing
Twingo2 and Clio2 small passenger cars.

SerbiaAccording to Focus2move, the sales volume of vehicles inRomania in Q1 2023 increased by 27.6% to 41,000 vehicles
compared to the same period of the previous year, and the top
5 brands were Dacia, Renault, Hyundai, Skoda and Toyota,
showing that the automotive market has been gradually
recovering in the post-pandemic era.

078 惠達雜誌The automobile industry is an important part of the
Serbian economy, and the main vehicle manufacturers
include Fiat (Serbia), Red Flag Special Purpose Vehicle
Company, Red Flag Truck Company, FAP, Neobus, Ikarbus,
etc. Among them, the Fiat Group of Italy, through its
investment and holding in the Red Flag Automobile
Plant of Gulagoevac, has built a center of the automobile
industry mainly focusing on the manufacturing ofcomplete vehicles and spare parts processing in theSoutheast Europe region.

Industry Focus >>II. Business Opportunities
and Issues
Business Opportunities
1. Government Support for theAutomobile Industry“Automotive” is a dominant industry in Central and E.
European countries, some of which have announced
a series of policies to encourage foreign investmentin the automotive industry, such as the subsidy of atleast 10 million euros for new plants meeting certain
conditions a nd one-stop ser vices of Hu nga r ia n
Investment and Trade Promotion Agency (HITPA). The
Slovenian government, in cooperation with the Export
Development Bank (SID) and the European Investment
Bank (EIB), provides loans for long-term development
projects in the automotive industry, with special
subsidies for CO2 emission reduction and energy-saving
technologies.

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2. Strong Automobile Demand in Central
and E. European Countries
Government and market orientation offer opportunities
and development for the components industry inCentral and E. European countries. For example, thegovernments of Czech Rep., Poland, Serbia and othercountries support the development of cross-bordercooperation in automobile manufacturing and joint
development of new energy vehicles and components
to promote the development of new energy vehicles in
the local market. In terms of market, the Central andE. European countries, such as Hungary, the Czech
Rep., Poland, Romania and other countries, show very
low car ownership, showing a great market potential.
In addition, the domestic supply of spare parts in somecountries (such as Hungary) still cannot meet the needsof day-to-day automobile assembly, so they still need torely on a large number of imports.
3. Great Investment Opportunities in the
Automotive Markets of Central and E.
European Countries
Compared with the advanced EU countries, Central andE. European countries (such as Poland) are not very
strict on the management of the automotive components
market and the technical certification and regulatory
review is more relaxed, so the cost of entering themarket is generally lower. In addition, as consumers
in the Central and E. European countries care mostly
about: (1) stable quality and good maintenance services(2) prices cheaper than other local brands, Taiwan’s
export-oriented automotive components manufacturers
with advantages may benefit from potential business
opportunities.

080 惠達雜誌 Copyright owned by Fastener World / Article by James Hsiao

4. Opportunities for the EV Components
Industry
Compared with the high EV ownership in advanced countries
in Europe, the U.S. and Japan, the EV market and charging
infrastructure in Central and E. Europe are still in the nascentstage. Taiwanese EV component manufacturers have alreadyentered the supply chain of the world’s major EV industry andhave practical experience and competitive advantages, which
will make Central and E. Europe a potential market for them tolay out their business in the future.

Issues
1. Inconsistent Market Standards
The inconsistency of standards in the automotive markets ofCentral and E. European countries has resulted in entry barriers
for manufacturers. For example, for commercial vehicles andseparately sold automotive parts, Central and E. European
countries implement different national standards, and thecorresponding inspection certificates are only valid in theirown countries, which have not realized mutual recognizedcertification internationally or among the EU member states.
2. Asymmetric Information on Cooperation
Due to the lack of authoritative and reliable channels to
obtain information, manufacturers do not have an in-depth
understanding of the automotive industry in Central and E.
European countries in terms of market conditions, investment
environment, technical standards, industrial advantages andrelevant laws and regulations, etc., and market development ismostly confined to irregular exhibitions, making it difficult toform a long-term and stable market.
3. Inadequate Market Mechanism
The overall trade criteria of Central and E. European
countries is not as mature as those of other advanced
European countries, the U.S. and Japan, resulting in relatively
complicated administrative approval procedures, lower
government efficiency, and frequently changing tariff rates,etc. In addition, there are also problems such as unsoundcredit system, imperfect inspection mechanism, incomplete
Customs declaration procedures, and non-transparent Customs
rules, adding the uncertainty to Taiwanese manufacturers’
deployment.
4. Fierce Market Competition
To observe the current automobile and components industry
market of the Central and E. European countries, the market
share is basically taken by W. European developed countries,
Japan and S. Korea, forming a perfect automobile andcomponents industry chain. Taiwanese manufacturers facingsuch a closed industrial feature must compete with the qualityof Europe, the U.S., Japan on the one hand, and create theirown market differentiation on the other hand, in order to gain
more market share.