28/6/2023 |Articles are machine translated
Annual press conference of the Automotive Industry Association 2023. | Photo: Barbora Mráčková
The automotive industry, a key sector of the Czech economy, confirmed its vitality last year despite a number of challenges. The sales and exports of the member companies of the Automotive Industry Association (AutoSAP) achieved solid results, showing a year-on-year growth of almost 13% in both indicators. Despite the difficult economic situation, companies managed to retain their core employees, and wages in the sector remain above standard with a year-on-year increase of 9%.
“Last year, the automotive industry began to recover from the aftershocks of the covid crisis, although it still faced a number of ongoing and new challenges. After three years of declining volumes, production growth was again achieved in most segments, despite persistent problems in supply chains, chip shortages, the war in Ukraine, extreme energy price increases and high inflation,” said Martin Jahn, President of AutoSAP, commenting on last year’s results, adding: “AutoSAP companies have thus once again demonstrated their resilience and viability.”
The total sales of AutoSAP member companies grew by 12.7% year-on-year last year and exceeded CZK 1.2 trillion. The volume of exports also increased by the same percentage, reaching CZK 1,027.6 billion. Overall, exports of goods and services account for 82% of revenues. The most important markets for domestic companies are the countries of the European Union, with Germany dominating (29.3% share).
The increase in sales of companies in the automotive sector, with an emphasis on the supplier sector, was also appreciated by AutoSAP Vice President Miroslav Dvořák: “Despite all the problems they faced, supplier companies in the automotive industry managed to increase sales by more than 9% year-on-year and exports increased by almost 13%. It remains true that many automotive suppliers are also among the largest exporters in the Czech Republic.” However, he added that suppliers are now in an extremely difficult situation: “Prices for materials and energy continue to remain high, possibly rising, and persistent inflation is also putting upward pressure on wages. However, suppliers are finding it difficult to pass on the higher production costs to prices, so the situation in supply chains remains extremely volatile and there is a high risk of entering into long-term contracts. Production planning is therefore becoming an extremely difficult category. If suppliers cannot fully rely on order volumes, they are then forced to lower production according to estimates – which increases the risk of non-delivery.”
In 2022, AutoSAP companies saw only a minimal fluctuation in the number of employees, by -1.7% to a total of 140,253. However, despite the difficult economic situation, there were no layoffs of core employees. In view of the continuing bleak labour market situation, companies are doing their utmost to retain their workforce. The demand for employees, especially those with higher qualifications, remains an important issue. Wage developments have also been in line with the market situation. For the first time in history, the average wage in the Association’s companies exceeded the threshold of CZK 50,000, thus exceeding the average wage in the Czech Republic by 25%. The highest average wages were reported by final manufacturers, at more than CZK 61 thousand.
According to Vice President Miroslav Dvořák, the tight labour market, where there is a lack of employees at all qualification levels, poses a major problem for the further development of industry in the Czech Republic. For the future, he therefore recommends: ‘It is necessary to create, and with the help of national and European funds finance, a system of lifelong learning through upskilling and reskilling platforms. These will help to update employees’ qualifications in line with the technological development of companies and thus maintain their employability. A well-designed retraining system will increase internal and external labour mobility. At the same time, secondary school curricula should be revised to meet the needs of new trends in industry. Related to this is the need to anchor dual vocational training, which will allow the practical part of the training to be carried out at employers’ workplaces. We also consider it necessary to simplify the process of managed migration in order to attract qualified foreign employees to the Czech Republic.”
According to President Martin Jahn, it is difficult to forecast the development of the automotive industry in the coming months. “The supply and demand chains are still affected by the reverberations of the covid in China as well as the geopolitical situation. Chip shortages continue to loom, although we expect the second half of the year to bring improvement and more stability. However, our future will be determined primarily by the country’s ability to capture the ongoing transformation towards zero-emission mobility and manufacturing. Specifically for the automotive sector, we believe it is crucial that even in the current budget constrained times, the government finds a way to attract strategic projects to the Czech Republic focused on the production of batteries, chips, power electronics and other components of battery-powered vehicles. Critical to the future of the industry as a whole is the ability to secure sufficient affordable and green energy for the Czech Republic, increased support for science, research and innovation, and full use of available European resources. The currently discussed Euro 7 emission standard, in a situation where companies are intensively switching to emission-free mobility, is more of a diversion of resources and attention away from these issues.”
