| Author: |
Marek Romancov, PricewaterhouseCoopers |
| Publication: |
The Prague Tribune |
| Date: |
1/11/2005 |
Sector analysis
In 2004, Škoda Auto launched the new Octavia, which was positively welcomed on all the important markets, and consequently Škoda Auto produced more than 55,000 of these vehicles. Combined with the previous Octavia model (now called the Octavia Tour) Škoda Auto had output of more than 180,000 Octavias. The combi and 4x4 models were also launched in 2004, while production of the Superb has been increased to almost 23,000 vehicles. Thus, in total Škoda Auto produced 444,000 vehicles, which was a 1.5% increase compared to 2003. Last year was the break year for Škoda Auto in terms of market segmentation, as for the first time the Czech market was superseded by the German market. Škoda Auto also increased overseas production in India, and prepared for production in Kazakhstan and especially in China (production is expected to commence in 2007).
The TPCA automotive plant was completed at the end of 2004, with production commencing in 2005. It is expected (and this has been clearly shown in the first six months of 2005) that the output of TPCA will positively influence the net exports of the Czech economy, overall production of GDP, and other macro-economical indicators, as most of the vehicles will be exported to EU countries.
The TPCA and the new Octavia are also the drivers for investment into the components production sector, whereby it is expected that the 2005 figures will show significantly increased output. The investments of Peugeot and Kia/Hyundai in Slovakia will likely have an additional positive impact on the components industry. The Czech Automotive industry maintains a competitive advantage over other EU-15 countries, and in certain aspects ahead of Poland, Hungary or Slovakia as well. Nevertheless, there is a visible trend towards increased pressure on value-added functions instead of manual laborintensive activities.
In terms of vehicle sales, the market has dropped slightly in comparison to 2003, to 123,000 new registrations. This is most likely the effect of EU accession, which brought an increase of used-vehicle imports to the Czech Republic. The structure of the Czech car fleet shows an average age of approximately 13 years. Škoda Auto remains the market leader, with its market share just below 50%. However, Japanese and Korean brands are increasing their share on the market, and it is expected that this trend will continue.
