The automotive industry & Mobility
The automotive industry
The Czech automotive industry is a fundamental part of the Czech economy. The production of cars, parts and accessories, as well as the increasingly important sector of special-purpose organisations focusing on R&D, software engineering and other supporting services account for nearly one-tenth of the Czech Republic’s gross domestic product, over one-quarter of industrial production and more than one-fifth of Czech exports. The automotive industry directly employs more than 180,000 people in all regions of the Czech Republic and accounts for up to half a million jobs overall.
The Czech Republic as a global player
What followed the 2008 economic crisis can be described as unprecedented. As the number of companies operating in the Czech automotive industry grew and production volumes were gradually ramped up, the Czech automotive industry reinforced its position on the world map. Industrial tradition, skills, technical education, strong know-how and a relatively affordable workforce made the Czech Republic Europe’s third and the world’s tenth largest producer of passenger vehicles (in 2020). This strong growth was slowed by the COVID-19 pandemic, which hit Europe in the spring of 2020. In March and April, production was halted on a scale that had been inconceivable until then. It was paralysed throughout the world to a varying extent for an average of about six to eight weeks. Although the Czech automotive industry recovered very quickly from that shock, driving the production to the limit of its capacities in the second half of 2020, the final production of motor vehicles saw a decline of 19.2% due to production losses, customer caution and other factors. The Czech automotive industry’s total sales of EUR 40 billion reached the level of 2016.
The global automotive industry was supposed to enjoy a restart in 2021. However, the pandemic, disrupted logistics chains, increased demand for consumer electronics, adverse weather and the technological complexity of production have all contributed to the onset of a global chip shortage. The shortage manifested itself in full in the second half of 2021, slowing down and, in some cases, even halting car production in the Czech Republic and other countries.
In spite of this, the Czech automotive industry achieved relatively good results. A total of 1,105,223 passenger vehicles, 4,947 buses, 1,262 trucks, 1,035 motorcycles and 29,231 trailers and semi-trailers were produced. ŠKODA AUTO is the largest producer of passenger cars, accounting for almost 62% of the total production volume with 680,287 units produced at its two Czech plants in Mladá Boleslav and Kvasiny. It is followed by Hyundai Motor Manufacturing Czech with 275,000 cars (24,9 % share) produced at the Nošovice plant in the Moravia-Silesia region and Toyota Motor Manufacturing Czech Republic in Kolín with 149,936 cars (13.6 %). The largest bus manufacturers include IVECO Czech Republic (4,365 buses), SOR Libchavy (552 buses) and ŠKODA Electric (six buses). The traditional TATRA brand produced 1,262 trucks at its Kopřivnice plant.
The automotive industry at a crossroads
Affected by the COVID-19 pandemic,its the resulting issues, the automotive industry has been in a profound operational crisis for almost two years. However, it is also facing the challenge of transformation triggered by technological progress and the pressure to decarbonise and make mobility green. Moreover, it is not only the product itself that is undergoing changes, but also production in general and the entire automotive value chain. ESG (Environmental, Social and Corporate Governance) sustainability is bound to bring new opportunities to many industries, including the automotive sector. While posing certain threats, these new trends represent a chance for many companies to strengthen their position in supply chains and advance towards production with a higher value added.
The Automotive Industry Association has monitored and spurred discussion on the main trends and challenges for several years. Zero-emission mobility and production, digitalisation and automation, connectivity, the use of artificial intelligence and the development of technologies for autonomous vehicles are fundamental issues for the Czech economy’s future. Collaboration with players from other industries – energy, IT and telecommunications – as well as active cooperation with the government and other stakeholders at the national and European level are also crucial for the Czech automotive industry’s success.
The Czech automotive industry has and will always have truly high aspirations. The industry is well prepared for both the actual production of future vehicles and the provision of comprehensive services across the sector. The Czech Republic has a chance to become an innovator and technological leader.
Automotive Industry Association of the Czech Republic
Thanks to its more than one-hundred-year history of precision engineering and its exceptional location, good infrastructure and highly skilled workforce, the Czech Republic plays a significant role in the automotive industry and related sectors. The country is home to three key automobile manufacturers, namely Škoda Auto, Toyota Motor Manufacturing Czech Republic and Hyundai Motor Manufacturing Czech. The Czech Republic also offers outstanding business opportunities for suppliers and is prepared to strengthen its position as one of the leading European centres for design and research and development in the mobility sector.
As one of the main current trends in this sector, clean mobility is on the rise also in the Czech Republic. Demand for electric vehicles rose significantly in the country in 2021 thanks to the expanding portfolio of brands and models, as well as to the country’s growing charging infrastructure and broader awareness and interest among general public. In comparison with 2019, four times as many battery-powered electric vehicles were registered in 2020 and another 40 percent growth was registered in 2021. The Czech Republic is a popular destination for battery production investment projects, the number rose even during the past two pandemic years.
The Czech Republic is a competitive location for establishing research and development centres. Its technical universities and research centres routinely collaborate with global manufacturers and provide services in the area of research, development and testing. Valeo already has research centres for autonomous technologies here and BMW or Accolade are currently working on such centres of its own.
The pandemic years have changed the whole world, including the sector of mobility and its trends. As the OEMs struggles with chip shortages, there is an opportunity for change in the supply chains. Despite the shortage, production of passenger cars towards the end of 2021 started to grow in the Czech Republic. The influence of the COVID-19 pandemic is also visible in consumer behaviour, there is more focus on micromobility and new individual means of transportation, e.g. car-sharing, ride-hailing, etc.