Transcript Automotive FDI in Central and Eastern Europe

doc. Ing. Tomas Dudas, PhD.
Global automotive industry
 One of the most important and most globalized
industries in the world economy
 This industry is undergoing major changes from the
80s (the change of national automotive corporations
into global champions)
 Global mergers and acquisitions and strategic alliances
(Renault-Nissan, DaimlerChrysler – which split several
years later)
Global Players
 GM (Cadillac, Chevrolet, GMC, Buick, Opel, Vauxhall,
Holden)
 Ford (Ford, Lincoln)
 Chrysler (Chrysler, Dodge, Ram, Jeep)
Global Players
 Toyota (Lexus)
 Honda
 Renault/Nissan
 Daimler (Mercedes-Benz, Smart)
 Volkswagen (VW, Škoda, Audi, Bentley, Seat, Bugatti,
Lamborghini, Porsche)
 Fiat (Alfa Romeo, Lancia, Ferrari, Maserati, Iveco)
 PSA (Pegueot, Citroen)
 Hyundai/Kia
Production by manufacturers in 2012
Automotive industry in CEE
 The first attempts to construct automobiles occurred
early in the 20th century – Czech republic, Hungary
 1920 – first joint venture (FIAT)
 Skoda corporation becomes the most important
automotive corporation in the region
 After WWII the automotive industry is nationalized
(with everything else) and central planning is
introduced
Automotive industry in CEE
 Škoda remained the most popular automobile
producer in the region, but the quality of the cars
decreased over the decades
 Poland produced Fiats in joint venture
 Hungary specialized itself as an autobus producer
(Ikarus)
 Slovakia did not have significant car manufacturing
capacities
Automotive industry in CEE
 The fall of the soviet regime brought huge problems
into the automotive sector in CEE
 The markets opened – and the domestic corporations
realized that they are not competitive enough
 They needed – capital and technology – they needed a
foreign investor
 Most of the FDI went into the Visegrad countries
Who is active in the region?
 Volkswagen took over Czech manufacturer Skoda
in 1991 and over the next eight years invested more
than DM2.4 billion in it. The company has also set
up assembly and component manufacturing
operations in Hungary, Poland and Slovakia. Its
Audi division has invested in component
manufacturing and assembly operations in
Hungary.
 Fiat began its restructuring of the Polish
automotive group FSM in 1991 and acquired a 90
percent stake in it the following year.
Who is active in the region?
 Suzuki set up production facilities in Hungary in 1992 and
invested more than $400 million in them more than the
remainder of the decade.
 Daewoo acquired the Polish automotive groups FSC and
FSO in 1996 and invested more than $1billion in these
facilities over the next two years. The firm was one of the
most aggressive investors in central and eastern Europe in
the late 1990s, acquiring seven formerly state-owned auto
plants across the region. Since the bankruptcy of parent
company Daewoo Motor in 2000, the future of many of
these plants is uncertain, although General Motors has
expressed an interest in investing in some of these
facilities.
Who is active in the region?
 General Motors (through its Opel subsidiary) launched a bid for
Poland’s FSO in the mid-1990s. When it lost out to Daewoo, GM
decided to make a DM530 million greenfield investment in an
integrated car plant in Poland. The company has also established
production facilities in Hungary.
 Toyota and Peugot made the largest-ever greenfield investment in the
Czech Republic in 2002, investing more than Ä1.5 billion in a car
manufacturing plant. Shortly afterward, Toyota also increased its
investment in its existing component manufacturing operations in
Poland.
 PSA Peugot Citroën signed an agreement in January 2003 to build a
greenfield production plant in Slovakia. The project is valued at 700
million EUR.
 Hyundai/KIA – built two factories (Kia – Slovakia
and Hyundai – Czech republic)
 Renault – took over Revoz in Slovenia in the early
90s, in 1999 they acquired the Dacia factory in
Romania and in 2008 25 % in AvtoVaz in Russia
 Daimler Benz - built a new factory in Hungary in
March 2012 (A-Class and B-Class)
Privatization vs. Greenfield
 Privatization – VW (Czech republik), Fiat (Poland),
Daewoo (Poland), Renault (Rumania a Slovenia)
 Greenfield – GM (Hungary a Poland), Suzuki
(Hungary), Audi (Hungary), PSA/Toyota (Czecg
republic), PSA (Slovakia), Kia (Slovakia), Hyundai
(Czech republic)
6.000
Automotive FDI Inward Stock
5.000
CZ
4.000
HU
PL
3.000
SK
SI
2.000
RO
1.000
EUR
0
mn
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Why the V4 countries?
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Stable economic and political environment
Nearness to the great markets in western Europe
Qualified labor force
Low labor costs – growing labor productivity
Flexible labor markets
EU membership
Attractive investment incentives
“Our major market is western Europe,
and we have chosen this region
primarily because of
its location, its cheap labour force and
profitable government incentives.”
—Tokuichi Uranishi, managing director,
European and African Operations,
Toyota
Motor Corporation
Where in V4?
 In the early 90s Czech republic and Poland were the
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favourites – privatization of the existing capacities
Hungary became popular in the mid 90s – greenfield
investments
Slovakia was not attractive those times
Late 90s and early 2000s – the FDI inflow in the industry is
dominated by greenfield investments
Investment incentives play an ever increasing role – the
offers of the competing states are often similar
Automobilový priemysel – pillar of the
Slovak economy
Počet vyrobených áut na Slovensku v rokoch 2000-2012
Number of employees in the Slovak
automotive industry 2002-2012