A new line of Toyotas, Peugeots and Citroens from Kolin - made in Czech Republic


The Czech Republic has become a magnet for Japanese investments, especially in the automotive industry. Maida Agovic spoke to Mr. Masatake Enomoto, the President of the Toyota Peugeot Citroen Automobile company which has invested close to EUR 1.5 billion in their new factory in Kolin, creating 3,000 new jobs. Maida Agovic has been finding out more about investment from the Far East and the Czech production of new Toyota, Peugeot, and Citroen small cars.

The new line of small Toyota, Peugeot, and Citroen cars, produced in Kolin near Prague, is likely to be presented to the public at the Geneva car show in March next year, according to the factory's management. With the production scheduled to begin during the first quarter of 2005, Kolin's industrial zone Ovcary is rapidly transforming from a messy construction site into one of the most modern and environmentally friendly automotive factories in the world.

This joint venture between the Japanese Toyota and the French PSA Peugeot Citroen dates back to July 2001 when the chiefs of the two companies signed an agreement in Brussels about the joint development and production of a new concept of small cars. The selection of the Czech town of Kolin, 60 km east of Prague, was announced in December of the same year. The overall investment into this new factory, which officially opened in January of this year, is estimated at approximately EUR 1.5 billion.

The President of the TPCA, Mr. Masatake Enomoto from Japan, who joined Toyota in 1976, gave me a few cautious words about the three new cars, careful not to break the general secrecy surrounding the production of the new line of Toyota, Peugeot, and Citroen models:

"It is small and affordable, and no compromise on quality and safety performance, and the reason why we're targeting small cars is that, as you may know, in the year 2008, under an agreement between ACEA (European Automobile Manufacturer's Association) and the EU, we have to achieve an emissions rate of 140 g/km of CO2. In the case of JAMA (Japanese Automotive Manufacturer Association), we agreed with the EU to achieve the same target from 2009, so this type of small car is very, very important for us to achieve that target."

The production capacity of the TPCA factory is 300,000 cars per year, targeting the entire European market. Despite strong local competition from the Czech Skoda factory nearby, Mr. Enomoto is confident of the success of the new line of cars that will come out of the Kolin factory in spring:

"I will say we're trying to be the best automotive plant at least within Toyota overseas plants, in terms of efficiency, so I will say that the total production efficiency and cost reduction efforts are our two main competitive advantages, but we're not so much interested in beating someone to win the game, but the most important thing is to get the customer satisfaction, that's all."

This Japanese-French joint venture will have another important impact on the Czech Republic, that of creating a large number of new jobs in the region:

"As of today we have 850 members, and by the end of this year we'd like to grow up to 1,500, and by the end of next year we will grow up to approximately 3,000."

According to the Czech Investment and Business Development Agency (Czech Invest), the Czech Republic is the most attractive location in Central and Eastern Europe for Japanese investment. Most of these foreign companies are active in automotive and electrical engineering industries.

Mr. Enomoto dismisses claims that the main reason for increased Japanese investment in this country is cheap labor force:

"...We all know, as businessmen, that after accession to the EU, sooner or later, the gap between Western Europe and the Central and Eastern Europe labor wages, so to speak, will be narrower. So I think there are much more important factors they took into account."

Instead, the President of the TPCA factory in Kolin claims that the main driving force behind Japanese companies is their wish to become well-established in the European automotive market, which is considered to be the world's toughest market in terms of competition.

The Czech Republic, with its overall favorable conditions, such as its geographic location, infrastructure, and tax incentives, is certainly a good choice for a project like the TPCA. With the construction work in its final stage and a test track already in place, the Toyota Peugeot Citroen Automobile factory in Kolin will soon be ready to face the competition.