27/6/2024 |Articles are machine translated
Return to pre-crisis production values, year-on-year growth of exports by more than 23 percent and sales to almost CZK 1.5 trillion – these are the basic attributes that can be used to characterize the development of the member companies of the Automotive Industry Association (AutoSAP) last year. This is a reaffirmation of the competitiveness of the domestic automotive industry and, given the weight of the sector in the overall economy, good news for the Czech Republic as a whole.
“The results of the Czech automotive industry for 2023 are clearly good news for the Czech economy. The sector was the driving force of industrial production and in many indicators has already surpassed the level before the pandemic,” says Martin Jahn, President of the Association of the Automotive Industry, and adds: “Automotive companies were able to cope with the fading volatility in supply chains and overall performed better again than a year earlier. The available data also shows the development of electric vehicle and component production, an area that requires considerable investment.”
Despite a number of challenges mentioned above, domestic car manufacturers managed to increase production by 14.8 percent year-on-year and almost reach the pre-crisis values with 1,397,816 passenger cars produced. The total number of road vehicles produced last year rose by 14 per cent year-on-year to 1,423,979 units. The number of electric vehicles increased by 34 per cent, with 180,887 produced, accounting for 13 per cent of total production.
Total sales of AutoSAP-affiliated companies rose 17.7 percent year-on-year to CZK 1,478.2 billion. Exports grew even faster (23.2 per cent year-on-year), with both finalists and suppliers contributing to this growth. It is still true that many suppliers of the automotive sector are among the largest Czech exporters ever. Germany remains the most important export partner with a stable share of 29.4 per cent. After the Brexit slump, the UK returned to second place, closely followed by France and Slovakia.
The number of employees in AutoSAP companies reached 141,862 at the end of last year and has been stable over the long term. Despite the difficult economic situation, there have been no redundancies of core staff – given the continuing difficult labour market situation, companies are doing their utmost to retain their employees. The automotive industry remains an attractive employer. The year-on-year increase in wages in AutoSAP companies reached 8.8 percent and the total average wage rose to CZK 54,637. This is 30.2 per cent higher than in other sectors of the manufacturing industry.
Regarding the future of the automotive industry, AutoSAP members define several areas that limit further development. One of these is the labour market. Miroslav Dvořák, Vice President and Vice Chairman of AutoSAP’s Supplier and Special Purpose Organisations Division, says: “It is essential that a system of lifelong learning through upskilling and reskilling platforms is created and financed with the help of national and EU structural funds. In the context of increasing pressure for change and upskilling, upskilling platforms will help workers develop, maintain employability and facilitate retraining. At the same time, they will increase internal and external workforce mobility.” At the same time, he mentions other conditions necessary for the successful development of the supplier base: simplification of the migration process to ensure a sufficient number of professionals, pressure for the amendment of the Education Act to enact a separate dual branch of vocational education at the secondary level, liberalisation of labour legislation or maximum digitisation of the labour agenda.
Martin Jahn also stresses the need to ensure greater flexibility in the labour market and adds other topics that will have a significant impact on the success of the domestic car industry in the future: ‘The automotive sector is undergoing one of the most fundamental transformations and we are now in a period when bread is being broken. Assuming that we manage to ensure greater flexibility in the labour market, keep energy prices at a reasonable level, and at the same time adopt specific national measures to support the development of science and research, there is no reason why Czech companies will not succeed in the global automotive market in the long term. We have to get used to the fact that competition, especially from Asia, does not sleep. Simply imposing tariffs on Chinese electric cars will not solve this in itself.”
And what will the next year be like? Martin Jahn remains optimistic. “However many challenges we will have to continue to work through, I am convinced, and the first five months of 2024 suggest, that the automotive industry is set for another record year, with production results well above last year’s and pushing us above the production volumes of the pre-crisis years,” says the president of the Automotive Industry Association.
