Czech auto sector sees 2015 surge in production and sales

Photo: Tomáš Adamec

The Czech auto industry, the driving force of manufacturing in the country, has just seen a record year as regards production and domestic sales. But will local and world conditions fuel such a strong performance in 2016 and going further forward?

Photo: Tomáš Adamec
The Czech Republic hosts three car production companies, Czech-based Škoda Auto, the French-Japanese joint venture TPCA, and the local unit of South Korean producer Hyundai.

The auto sector is a pretty accurate weather vane of the whole manufacturing sector. Last year, local car production jumped to just short of 1.3 million vehicles, around 50,000 more than 2014 with all three producers sharing the upturn.

And the local car market, which is not so consequential for the producers, played its part as well. Local car sales surged by almost 20 percent to just short of 231,000, according to the latest figures from the Association of Car Importers.

Škoda Auto led the way with local sales up 27 percent and grabbed around a third of the local market for new car sales. It’s big success story was sales of the latest version of the cheap small car Škoda Fabia. Hyundai saw its sales jump by around four percent in spite of an aggressive sales campaign. TPCA exports nearly all of its production under the brand names of its partners.

We asked PricewaterhouseCoopers’ local auto analyst Vojtěch Opleštil whether the Czech auto performance could continue so strong into 2016.

“I think that production in 2016 can still grow because the brands that are being produced in the Czech Republic are quite successful with expanding markets and with quite a good model portfolio, so we still expect some growth. Of course, there is a risk, which was already included in the statistics last year, which are the economic problems in Russia and maybe in some other markets, especially in China.

“Going back to car sales, new car registrations, we still expect quite strong growth although it won’t be as strong as last year and we expect that passenger car sales will be higher by 10 to 15 percent in 2016.”

Two ongoing factors, the low crown, helping Czech producers sell their cars abroad, and low oil prices, should help continue to help the local and worldwide auto market sales this year. But the low crown might not continue to be a factor going into 2017.

It should also be pointed out that around 70 percent of new car sales in the Czech Republic are to companies and that the overall age profile of passenger cars on Czech roads is one of the oldest in Europe. That leaves plenty more room for rejuvenation of the overall fleet, company and individual wealth permitting.