Rapidly growing significance of CEE in automotive industry
- All leading global manufacturers are investing and producing in CEE
- CEE's share in European production of passenger cars is now almost 16%, and this share has doubled since 2002
Central and Eastern Europe (CEE) has become an important factor for the world's automotive industry, which is a highly consolidated and globalised business. In 2006, the overall production of motor vehicles reached 69 million units and was dominated by three traditional automotive regions: North America, Japan and Western Europe. Some leading world players are however facing an increasing number of challenges, with falling demand in the more traditional markets, overcapacity, increasing competition and rising costs for research and development, high oil prices and triggering complex restructuring measures, including relocation of production. "CEE countries are among the main beneficiaries in these circumstances", says Debora Revoltella, UniCredit Group Chief CEE economist. "CEE now accounts for almost 16% of passenger cars produced in Europe and this share has doubled since 2002."1
In 2006, almost 5 million2 vehicles were produced in CEE and the automotive sector is growing by about 20 % annually in terms of value added3. The fast development of the automotive industry in CEE would not be possible without substantial foreign investment. UniCredit Group's study on the automotive sector shows that foreign investments have already reached a total value of over EUR 20 bn. "In recent years the CEE region has attracted all the leading global manufacturers from Europe, US and Asia, including Volkswagen, Renault, Peugeot-Citroën, Fiat, GM, Ford, Toyota, Hyundai-KIA, Suzuki and many others", explains Debora Revoltella. The role of CEE as a production base is especially significant in the production of small, economical cars where cost savings are essential.
Automotive sector in CEE is export-oriented, with domestic demand as future asset
The fast growth in local vehicle production is also reflected in the expanding supplier segment, which accounts for a large part of the industry's value in many CEE countries. The CEE automotive industry is strongly export-oriented and regional export sales have almost tripled since 2000. Both foreign direct investment and exports are increasing rapidly and supporting each other. The region attracts investors with significant cost advantages but also with a business environment that is improving quickly. "The high level of attractiveness of the CEE region also results from its large market potential", says Debora Revoltella. "It is a combination of population size, fast growing incomes and under-penetration in terms of vehicles in use." Car penetration in CEE – with less than 20 cars per 100 inhabitants in Russia, Turkey and Romania, for instance – is much lower than in Western Europe (Italy and Germany have almost 60 cars per 100 inhabitants).
Many global producers locate their car manufacturing facilities in the region counting on the fast development of local sales in the future. The total number of registered cars in CEE has reached 75 million2. New car sales were 3 million2 in 2006. Although the growth of new car sales in the region does not always meet the high expectations, some CEE markets – especially Russia, Turkey and Romania – show good growth prospects, as their converging economies will be able to absorb an increasing number of new cars.
The "New Detroit" in terms of automotive production will be in CEE
The central European cross-border cluster (Czech Republic, Slovakia, Poland, Hungary), the "New Detroit", will remain or even expand as one of the most important centres of automotive production4. Currently the Czech Republic is the leader in the manufacturing of passenger cars, but production in Slovakia will increase even more rapidly. In the Czech Republic 850,000 cars were manufactured in 2006, representing 30 % of CEE's total production. Other leading countries in car production were Poland with over 600,000 units in 2006 and Turkey, with around 550,000 cars. In the near future Slovakia will become a regional tiger as it has recently received huge foreign investments (PSA, Kia) that add to the important presence of Volkswagen.
About UniCredit Group
UniCredit has a presence in 23 countries, with over 40 million clients and 9,000 branches, approximately 170,000 employees and total assets of approximately €1,018 billion (pro forma) as at 30 June 2007.
Through the merger with Capitalia, effective as of 1 October 2007, UniCredit has significantly strengthened its presence in Italy, which is one of its core markets alongside Germany, Austria and CEE.
In the CEE region, UniCredit operates the largest international banking network with over 3,700 branches and outlets, where more than 76,000 employees serve approximately 27 million customers.
1 The figure is about 22% if Russia is included.
2 Figures include Russia (where more than one million vehicles were produced).
3 See chart "Development of the Central Eastern European automotive industry, 2000-2005"
4 See chart "Role of different countries in the CEE automotive sector"
"Study on automotive industry" (PDF; 3.4 MB)
chart "Top global car manufacturers producing in CEE"
chart "Development of the Central Eastern European automotive industry, 2000-2005"
chart "Role of different countries in the CEE automotive sector"
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e-mail : Silvana.Lins@ba-ca.com