AUTOMOTIVE STUDY 2025 / Šaroch (ed.) et al.

THE AUTOMOTIVE INDUSTRY AND AUTOMOTIVE MARKET IN A PERIOD OF CHANGE

World • Europe • Czechia

Stanislav Šaroch (ed.) et al.

2025

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ISBN (print) 978-3-946915-34-8

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THE AUTOMOTIVE INDUSTRY AND AUTOMOTIVE MARKET IN A PERIOD OF CHANGE World, Europe, Czechia

Stanislav Šaroch (ed.)

Romana Čižinská Tereza Hrtúsová Michal Hrubý Tomáš Kozelský

Pavel Neset Radek Novák

2025

Authors: Stanislav Šaroch – chapters 1, 2, 3 Romana Čižinská – chapter 4 Tereza Hrtúsová – chapters 1, 2, 3 Michal Hrubý – chapters 1, 2, 3 Tomáš Kozelský – chapters 1, 2, 3 Pavel Neset – chapter 4 Radek Novák – chapters 1, 2, 3 Scientific reviewers: PhDr. Kamil Galuščák, Ph.D. prof. Ing. Radim Lenort, Ph.D.

Editor: Stanislav Šaroch

Technical Editors: Věra Herčuthová František Rozkot

1 st edition

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ISBN 978-3-946915-34-8 ISBN (ebook) 978-3-946915-35-5

CONTENT

INTRODUCTION

5

1 GLOBAL AUTOMOTIVE INDUSTRY

7

1.1 Distribution of production capacity worldwide

7 7

1.1.1 Motor vehicle production in the context of world regions 1.1.2 Car production relative to the population of the country

10 12

1.1.3 Foreign trade in passenger cars by country

1.2 Global car sales: Market penetration and major players

12

1.3 Status and outlook for the global EV market

16

1.4 China: Global leader

20

1.5 Overall characteristics of the global automotive market

24

2 AUTOMOTIVE INDUSTRY IN THE EU

27

2.1 EU and global production capacities

29

2.1.1 The importance of the automotive industry in terms of GDP in the EU 2.1.2 The growing importance of foreign trade in motor vehicles in the European Union

33

34

2.2 Changing market for new passenger cars in the EU, EV sales on the rise 39 2.2.1 New passenger car registrations by brand in the EU 43

2.3 The EU on the road to electromobility

46

2.4 European car market in brief

57

3 THE AUTOMOTIVE INDUSTRY (AND AUTOMOTIVE MARKET) IN THE CZECH REPUBLIC 61

3.1 Distribution of production capacities in the Czech Republic and trends 61

3.2 The importance of the automotive industry for the Czech economy

65

3.3 Condition of companies in the Czech automotive industry – selected indicators 68

3.4 The automotive industry from a foreign trade perspective

76

3.5 Passenger car market: penetration, age, arrival of alternative fuels

82

3.6 Sector trends from a price development perspective

87

3

3.7 Brief characteristics of the Czech Republic as one of the production bases of the European automotive industry 4 DEVELOPMENT OF THE ECONOMIC VALUE ADDED OF THE AUTOMOTIVE INDUSTRY IN THE V4 COUNTRIES AND GERMANY

91

94

4.1 Introduction

94

4.2 Data and Methodology

96

4.3 Results

101

4.4 Discussion and Conclusions

107

CONCLUSION

109

ZUSAMMENFASSUNG

113

INDEX

115

4

Introduction e automotive industry is a traditional and important sector in the world economy. Asia has become the industry’s centre of gravity and largest market over the last twenty years, although both Europe and America remain important markets with signi cant production capacity. ose who are closely involved in international economic relations know that this is a highly concentrated industry, which brings economies of scale, and an industry with a high level of international investment. International trade in cars is also a signi cant part of world international trade in terms of its scale. It is a sector where hundreds of technical inventions and innovative production processes with potential applications in other areas of human activity have been developed or are being applied. is sector is undergoing a signi cant transformation, for which the name CASE was born in the recent past. is acronym stands for the simultaneous emergence and de-velopment of digital technologies, combined with advances in connectivity (C), the emergence of driver assistance systems evolving into autonomous driving (A), the so-called new economy represented by car sharing (S) and the transition to electromobility (E). e above transformation is made possible not only by the development of digital technologies, which have resulted in cars becoming, in part, ‚computers and data collec tors on wheels‘, but also by regulation, which, through various economic and adminis trative economic policy instruments, is leading to the replacement of internal combus tion engine propulsion with electric motors or other alternative propulsion methods, such as hydrogen-based technologies. is study attempts to o er an overview of the state and development of the global automotive industry in the aforementioned perspectives by taking a relatively broad view through quantitative data. Chapter 1 provides a view of the global automotive industry as a whole and includes an analysis of the growing importance and inclination towards electromobility, where China is undeniably the dominant player. e position of the European automotive industry in a global comparison is also of interest to the study, hence we devote a separate chapter (2) to it. Here too, this year’s study pays increased attention to the rising phenomenon of electromobility, but also to the importance of the sector for the European economy and its structure in supply chains. Chapter 3 is devoted to the importance of the automotive industry for the Czech econ-omy and the small Czech market. Chapter 4 provides an analysis of the development of the nancial performance of companies, using the perspective of economic value added in comparison with the economies of the Visegrad Four countries and Germany. e study is closely related to our work published in 2023 under the title European Au-tomotive Industry in the Century of Asia and is a selection from more extensive mate-rial published directly by Škoda Auto University in Czech in 2024.

Wishing you an inspiring read. On behalf of the team of authors

Stanislav Šaroch

5

1 GLOBAL AUTOMOTIVE INDUSTRY

1.1 Distribution of production capacity worldwide

1.1.1 Motor vehicle production in the context of world regions We are witnessing signi cant changes in the evolution of the global automotive sector, re ecting technological advances as well as changing consumer preferences and economic conditions. In terms of global motor vehicle production, 2003 and 2023 di er signi cantly. e Asian region, with a production of 22 million vehicles in 2003, will top out at an admirable 55.1 million in 2023. is increase of more than 150% con rms that the Asian region, and China in particular, has become the hub of the automotive industry. As the world’s largest vehicle manufacturer, China is constantly investing in new technologies, electri cation and autonomous driving. Asian automakers dominate the global market not only through high production, but also through innovation and competitive pricing, making them attractive to international markets. In contrast, Europe, a past leader in the automotive industry, has seen its vehicle production fall from 20 million in 2003 to 18.1 million in 2023, a decline of 10% over the past 20 years. is trend re ects various factors, including stricter ecological regulations, increasing competition from Asian manufacturers and changes in demand. e Americas region shows moderate but steady growth from 18.3 million vehicles in 2003 to 19.1 million in 2023. e region is also characterized by high demand for light-truck vehicles. ese are light commercial vehicles (for transporting up to 3.5 tons). Typically, in the USA, for example, the Ford F-150 pickup truck. Statistics on production and sales of passenger vehicles in the region, especially in the USA, are a ected by this trend as they do not include this type of vehicle. In the US, light trucks are often the equivalent of a passenger car. Motor vehicle production in Africa has grown from 0.4 million in 2003 to 1.2 million in 2023, and the region represents great potential for the future of the automotive industry. Local production and cooperation with international automakers can move this region of Africa forward. Overall, the development of vehicle production from 2003 to 2023 is an example of dynamism and adaptation in the automotive industry. Asia remains the unwavering leader, while Europe and America are struggling to adapt to changing conditions.

7

Fig. 1.1: Global motor vehicle production, 2003 vs. 2023 (million units, % change)

Source: International Organization of Motor Vehicle Manufacturers (OICA); the Asian region includes Oceania and the Middle East Until 2017, we had witnessed a steady growth in the production of motor vehicles worldwide. However, 2018 brought a reversal as the rst signs of a decline emerged. is trend was exacerbated during the coronavirus pandemic. By 2020, motor vehicle production had fallen to 2010 levels, re ecting the signi cant impact of the global crisis. A year later, in 2021, the situation had improved slightly, with total production reaching 80.2 million units. e following year, 2022, continued the positive trend and production rose to 85 million units, representing a 6% year-on-year increase. Even so, production remained 8% lower than in the pre-Covid year of 2019. A signi cant factor that negatively a ected the global automotive industry was the chip crisis that erupted during the global coronavirus pandemic. In the Czech Republic alone, around 300,000 cars that were in demand in 2021 were not produced due to a shortage of chips. However, 2023 brought a signi cant turnaround. World vehicle production returned to pre-pandemic levels, reaching almost 94 million units. Overall motor vehicle production is dominated by passenger cars, with a total of 68 million units produced in 2023 (72% of total motor vehicle production). Compared to 2022, this is a 10% growth. Passenger car production grew by around 11% in 2023.

8

Fig. 1.2: Global motor vehicle production (million units)

Source: International Organization of Motor Vehicle Manufacturers (OICA). Note: Other motor vehicles include light commercial vehicles, trucks, and buses Asia has long been a leader in passenger car production. In 2023, the region accounted for around 69% of the global share, representing a production of 46.6 million units. Of this, China alone dominated with 38% of total global passenger car production. Europe, with 15.5 million passenger cars, accounted for 23% of the market. In contrast, the United States produced only 1.8 million passenger cars in 2023, accounting for around 3% of global production. is lower market share can be explained by the higher demand for vehicle types such as light trucks (typically Ford pickups in the US, see above), which are not included in passenger car statistics. Pickup trucks and other light commercial vehicles account for 80% of total vehicle production in the US, compared to 12% in Europe. In the Americas region, 13.3 million light commercial vehicles will be produced in 2023, with 63% (8.5 million) in the US. Production of passenger cars and light commercial vehicles in Europe in 2023 was 17.7 million units, and 18.5 million units in the Americas region. In the long term, there is a 33% increase in production within the Asian region compared to the 2012 period. China alone increased production by 68% compared to 2012. Europe saw an 11% drop in production compared to 2012 (Germany saw a 24% drop in passenger car production). e Americas region saw a 49% drop in passenger car production (the US saw a 56% drop).

9

Fig. 1.3: Global passenger car production (2023 and 2012, million units; the caption indicates production in 2023 and % change compared to 2012)

Source: International Organization of Motor Vehicle Manufacturers (OICA); the Americas region includes North, Central and South America; the Asian region includes Oceania and the Middle East 1.1.2 Car production relative to the population of the country Passenger car production has long been dominated by China, where a total of 26 million cars were produced in 2023. Compared to 2022, this represents a 10% growth in passenger car production. At the same time, passenger car production in China is 22% higher than in the pandemic year 2019. Japan is in second place, where 7.8 million passenger cars were produced in 2023, an increase of 18% compared to 2022 (compared to 2019, this is a 7% decrease). India then follows with the production of 4.8 million passenger cars. Compared to 2022, this is an 8% growth. e Czech Republic is the 9th largest producer of passenger cars in the world with a production of 1.4 million units. Compared to 2022, this is a growth of 15%. Compared to 2019, i.e. before the coronavirus pandemic, the Czech Republic’s production for 2023 was still 2% lower. If we express the production of passenger cars in these countries in relation to the population, Slovakia comes rst, with almost 200 passenger cars produced per 1,000 inhabitants. China, the world’s largest producer of passenger cars by volume, has 19 cars per 1 000 inhabitants. Japan has a total of 62 cars per 1 000 inhabitants and India has only 3 passenger cars per 1 000 inhabitants. e Czech Republic is the second largest producer of passenger cars per 1 000 inhabitants (almost 130 cars/1 000 inhabitants).

10

Fig. 1.4: The world’s largest passenger car manufacturers (2023)

Zdroj: International Organization of Motor Vehicle Manufacturers (OICA), UN (2024); ranked by number of passenger cars produced In terms of nancial results, Volkswagen tops the list of the world’s largest vehicle manufacturers, with sales of $318 billion in 2023. In second place is the Japanese conglomerate Toyota with total sales of USD 286 billion. ird place was taken by Stellantis, with sales of USD 201 billion. Table 1.1: Global automotive manufacturers by revenue 2023 (USD billion) Manufacturer Revenues for 2023 in USD billion Volkswagen 318.32 Toyota Motor Corporation 286.15 Stellantis N.V. 200.92 Ford Motor Company 169.82 General Motors Company 169.73 Mercedes-Benz Group AG 161.91 Bayerische Motoren Werke Aktiengesellschaft 158.03 Honda Motor Co Ltd 129.18 Hyundai Motor Company 118.37 SAIC Motor Corporation Limited 103.22 Tesla Inc. 94.03 Source: Yahoo Finance

11

1.1.3 Foreign trade in passenger cars by country If we look at the largest producers of passenger cars in terms of the volume of trade balance, countries such as Brazil, Turkey, the United Kingdom, France, the USA and Iran have a negative balance (i.e. they import more) according to the UN Comtrade database. Germany (USD 100 billion) and Japan (USD 98 billion) had the largest excess of exports over imports of passenger cars in 2023. China was also in a positive trade balance, with a balance of USD 30 billion. e Czech Republic’s balance is positive at USD 25 billion. Fig. 1.5: Trade balance of passenger motor vehicle trade in selected countries (2023 and 2021, USD billion)

Source: UN Comtrade Database; these are the leading passenger car manufacturers; SITC 7812; * data for 2022, ** data only for 2021

1.2 Global car sales: Market penetration and major players For many European carmakers, Europe and Asia are the dominant world regions in terms of car sales (by number of units sold or by revenue). e weight of the Asian region is often similar to that of Europe. is is shown in the companies’ annual reports. For example, the share of the Asian region in Volkswagen’s sales in 2023 was around 40%, while Europe’s share was 41%. China alone accounted for 36% of the group’s global sales in 2023. Passenger car sales in 2023 amounted to 65.3 million units worldwide, an increase of 11% compared to 2022. World sales thus even slightly exceeded the level of 2019. e Asian region has long had the largest share of sales, with almost 43 million passenger cars sold in 2023 (65% share). Of these, China alone accounts for 26 million units sold (40% share). Sales in Europe amounted to 15 million units (23% share). In

12

the USA, 3.1 million passenger cars were sold, accounting for 5% of global sales. e statistics are again in uenced by the high demand for light-truck vehicles in the USA. Fig. 1.6: Global passenger car sales (2023, million units; the caption indicates sales in 2023 and % change compared to 2022)

Source: International Organization of Motor Vehicle Manufacturers (OICA); the Americas region includes North, Central and South America; the Asian region includes Oceania and the Middle East In terms of year-on-year change in the number of registered (sold) passenger cars within world regions, Asia experienced the highest year-on-year growth in 2023 (10%). Sales in the European region grew by almost 19% year-on-year in 2023. e Asian region is also the only one to grow passenger car sales above 2019 levels (up 17% in 2023 from 2019). All other regions remained below the 2019 period. Passenger car sales in Europe were down 16% in 2023 compared to 2019, 28% in the Americas and 15% in Africa. Among the top passenger car-producing countries, China ranks No. 1 in the number of vehicles sold, with 26 million passenger cars sold there in 2023. is is followed by India with 4.1 million cars sold, Japan (4 million units) and the US (3 million passenger cars sold). In per capita terms, however, Germany sold the most passenger cars in 2023 (about 34 cars per 1,000 inhabitants). is is followed by Japan (32 cars per 1,000 inhabitants) and South Korea, where the number of cars sold per 1,000 inhabitants was around 29. In the Czech Republic, 20 cars per 1,000 inhabitants were sold in 2023.

13

Fig. 1.7: Passenger car registrations/sales in selected countries (2023, million units)

Source: International Organization of Motor Vehicle Manufacturers (OICA), UN (2024); sorted by number of passenger cars sold; *data for Iran was not available at the time of processing

Table 1.2: New car sales and cars in use per thousand inhabitants and GDP per capita in selected countries (2023, million units)

2023

2020

2023

Car in use per ths. inh.

Sales per ths. inh.

GDP per capita

Germany

34 26 20 28 20 32 16 29

571 564 564 533 520 499 450 372 347 194 175 154

69 531.6 63 880.9 55 206.5 60 735.4 52 907.9 51 399.0 43 555.9 60 046.3 82 715.1 24 502.8 21 052.0 38 390.9

France

Czechia

UK

Spain Japan

Slovakia

South Korea

USA* China Brazil Turkey

9

18

8

11

14

Indonesia

3 3

57 24

15 553.6

India 10 233.4 Source: OICA, IMF; Gross domestic product per capita, current prices Purchasing power parity; international dollars; * e US is characterised by a high demand for light-truck vehicles. ese are light commercial vehicles (for transporting cargo up to 3.5 tonnes, e.g. the Ford F-150 pickup truck). e statistics on production and sales of passenger vehicles in the Americas region, especially the USA, are affected by this trend as they do not include this type of vehicle. In the USA, light trucks are often the equivalent of a passenger car. In terms of the number of cars sold, Japan’s Toyota was the world’s number one car maker in 2023 with total sales of 11 million units (the same as in 2022), according to MarkLines. e Volkswagen Group, which sold a total of 9.2 million cars in 2023, remained in second place, as in 2022. e third position goes to Hyundai-Kia (7.3 million units). 2023 is also a landmark year for the Chinese manufacturer BYD, which has entered the top ten of the world’s largest concerns in terms of sales. Its sales in 2023 amounted to 3 million vehicles. Fig. 1.8: Global vehicle sales by selected car manufacturers in 2023, 2022 (million units, label in % indicates year-on-year change)

Source: MarkLines

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1.3 Status and outlook for the global EV market With increasing pressure to reduce greenhouse gas emissions and improve air quality, electric vehicles such as pure electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) are becoming increasingly popular. e transition to electromobility is seen as one of the main ways to meet ambitious sustainability targets and reduce the environmental footprint of transport. e statistics on the use of electric vehicles worldwide include both pure electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). e pressure to reduce emissions in transport has and will continue to in uence the development of numbers and the emphasis on the shift to electromobility. E-electromobility will be one of the key ways to achieve these limits. In terms of the share of EVs in the total number of passenger cars in use, Norway is the world leader with 29% in 2023. is is followed by Iceland (18%) and Sweden (11%). In China, the share of EVs in total passenger car use in 2023 is almost 8%. For Europe as a whole, it is 4% and for the world 3%. Pure electric motors are the predominant drive type. Of the 3% share of electric vehicles in the world’s car eet, 70% are battery electric vehicles (BEVs) and 30% are plug-in hybrids (PHEVs). In Europe, BEVs account for 60% and PHEVs for 40%. By 2030, the share of pure battery electric vehicles will grow even further. Of the EVs in use in 2030, the International Energy Agency (IEA) forecasts that 76% will be BEVs and 24% PHEVs. Fig. 1.9: Share of EVs in total passenger car use (%, 2023)

Source: International Energy Agency (IEA); BEVs and PHEVs. Top ten countries with the highest share; Europe and the world Norway also leads the way in terms of EV share of global passenger car sales, with an EV share of 93% in 2023. is is followed by Iceland (71%) and Sweden (60%). In

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Europe and China, the share of EVs in new passenger car sales in 2023 was 21% and 38% respectively, while the global share was 18%. Fig. 1.10: Share of EVs in total passenger car sales (%, 2023)

Source: International Energy Agency (IEA); BEVs and PHEVs. Top ten countries with the highest share; Europe and the world By 2030, the IEA forecasts that the global share of EVs in total passenger car use

will reach 16%, with 18% in Europe and 31% in China. Fig. 1.11: Projected share of EVs in passenger cars by 2030

Source: IEA; BEVs and PHEVs; according to the Stated Policies Scenario (STEP), i.e., the policy settings for EVs in each country e share of EVs in new passenger car sales is projected to be 44% worldwide by 2030, 60% in Europe and 68% in China. While the 2020 outlook projected a larger share of EV sales in Europe compared to China, the IEA’s current estimate is that China will dominate in 2030.

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Fig. 1.12: Projected EV share of passenger car sales to 2030

Source: IEA; BEVs and PHEVs; according to the Stated Policies Scenario (STEP), i.e., the policy settings for EVs in each country China’s BYD was the world’s largest producer of electric vehicles in 2023, with production of pure electric vehicles and plug-in hybrids exceeding 3 million units. Tesla came in second place with 1.8 million vehicles. Volkswagen came third with a production of 1 million units. Fig. 1.13: World production of EV by manufacturer, 2023 (in thousands of units)

Source: EV Volumes; BEV a PHEV In terms of EV sales by automotive conglomerates, BYD has claimed a 22% share of the global market with more than 3 million new registrations in 2023. Tesla came in second place with a 13.2% share and sales of 1.8 million units. BYD and Tesla together accounted for more than a third of the market.

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Fig. 1.14: Worldwide sales of EV by group, 2023 (in thousands of units)

Source: EV Volumes; BEV a PHEV In terms of EV sales by brand, BYD had a signi cant lead over Tesla in 2023. BYD sales were nearly 2.9 million units, whereas Tesla sales were 1.8 million units. BMW came in third place with 2023 EV sales totalling 500,000 units. Although Toyota is the biggest player globally in terms of passenger car sales, it is on the opposite side of the rankings when it comes to EV statistics. is is because the statistics consider pure battery electric vehicles and plug-in hybrids. Toyota has bet on mild hybrid powertrains, which are not included in these rankings. Fig. 1.15: Sales of electric vehicles by brand, 2023 (in thousands of units)

Source: EV Volumes; BEV a PHEV

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1.4 China: Global leader China, as the world’s largest producer of motor vehicles in the long term, recorded its rst year-on-year decline in production in 2018. Factors behind this decline include the deterioration of the global geopolitical situation, the overall economic slowdown and, at the end of 2019, the outbreak of the global pandemic of the COVID-19 disease. Production continued to decline year-on-year in 2020, with the 2021 period already booming again. In 2023, China’s motor vehicle production built on previous growth, with year on-year motor vehicle production increasing by 12% to an all-time high of 30 million. In the case of passenger car production in China, there was a 10% year-on-year increase to a total of 26 million units. Passenger cars accounted for 86% of total production. Fig. 1.16: Motor vehicle production in China (million units)

Source: International Organization of Motor Vehicle Manufacturers (OICA) Motor vehicle sales in China grew by 12% in 2023, totalling 30 million units. Passenger car sales alone totalled 26 million units in 2023, up nearly 11% year-on-year. In terms of manufacturers, the Chinese market is currently dominated by local producers. In 2022, Chinese carmakers have gained more than 50% of the domestic market share. German carmakers came in second, followed by Japanese carmakers in third place. is ranking was also true in 2023, with the share of sales by local producers in China reaching 56%, a year-on-year increase of almost 23%.

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Table 1.3: Car sales in China by manufacturers (2023)

Share (%)

YoY change (%)

Chinese brands German brands Japanese brands American brands Korean brands French brands

56,2 17,8 14,7

22,5

3,8

-11,3

8,9 1,6 0,5

5,3 9,1

-29,0

Source: MarkLines

China accounts for more than half of global EV sales e production of electric vehicles in China has been growing signi cantly since 2021. In 2021, the production of electric vehicles was 3.5 million units (160% year-on year growth). In 2022, the total production of electric vehicles in China was 7.1 million (+97% cars), of which 6.7 million were electric passenger cars. In 2023, China’s EV production reached nearly 10 million, 9.1 million were passenger cars. Fig. 1.17: EV production in China (million units)

Source: CAAM China’s EV sales in 2023 amounted to more than 8 million units. China’s share of global EV sales has long been around 50%. In 2023, China’s share of global EV sales had reached almost 60%.

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Fig. 1.18: Global EV sales and China’s share (thousands of units, China’s share in %)

Source: IEA

China’s export ambitions China is also demonstrating its intention to penetrate global automotive markets through a growing share of exports. For a long time, its car production has been predominantly domestically oriented, with exports accounting for between 2 and 3% of total production. However, since 2021, the trend has changed, with the share of exports in total production increasing signi cantly. In 2021, this share was almost 8%, rising to 13% in 2022 and reaching almost 16% in 2023. e total volume of motor vehicles exported in 2023 reached 4.9 million units, of which 4.1 million were passenger cars. Fig. 1.19: Total passenger car production in China (million units) and export share in production (%)

Source: CAAM

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Electric vehicles are a signi cant segment in China’s passenger car exports. Around 750,000 electric vehicles were destined for the European Union in 2023 from third countries, i.e. countries outside the EU area. China accounts for most of these imports, almost 60%. In 2023, 438,000 EVs were imported into EU countries from China. Fig. 1.20: Electric vehicle imports into the EU27 (thous. units, extra EU)

Source: Eurostat Of the EU countries with the largest share of EVs in 2023, China has a signi cant share in Slovenia, Spain and Belgium. In the case of Germany, China’s share of EV imports from third countries was one-third in 2023. Fig. 1.21: Electric vehicle imports to selected EU countries (thous. units, extra EU)

Source: Eurostat

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1.5 Overall characteristics of the global automotive market e automotive industry has undergone signi cant changes over the past two decades, with 2023 showing major shifts in production capacity and market trends. Asia has emerged as the dominant region with production of 55.1 million vehicles in 2023, an increase of more than 150% since 2003. In contrast, Europe, once the leader, has seen a decline from 20 million to 18.1 million units. After steady growth until 2017, there was a decline in 2018, which deepened during the COVID-19 pandemic. In 2023, vehicle production returned to pre pandemic levels to 94 million units, with passenger cars accounting for 72% of total production. China is the world’s largest producer of passenger cars, followed by Japan and India. e Czech Republic is the ninth largest producer of passenger cars in the world. In terms of sales, Volkswagen leads the ranking among car manufacturers, followed by Toyota and Stellantis. ese companies dominate the market and show strong competitiveness on a global scale. Germany and Japan have a positive trade balance in foreign trade in motor vehicles. Countries such as the USA, France and the UK have a negative balance of trade. From a pan-European perspective, the EU is a net exporter of cars. ere has been a signi cant change in the case of China, which has gone from being a net importer for years to a net exporter. Worldwide passenger car sales reached 65.3 million units, with Asia holding a dominant 65% share. China’s share of world sales is 40%. China is also the leader in the number of electric cars produced, a major exporter, and its share of electric cars in new car sales exceeds the EU average. erefore, China should maintain its lead. e share of EVs in new passenger car sales is expected to reach 44% worldwide by 2030, 60% in Europe and 68% in China. China s BYD was the world’s largest producer of EVs in 2023, with production of pure electric vehicles and plug-in hybrids exceeding 3 million units. Around 750,000 EVs were destined for the European Union in 2023 from third countries, i.e. countries outside the EU area. China accounts for many of these imports, almost 60%. Interestingly, if we measure the intensity of car production in each country in terms of the number of cars produced per capita, Slovakia produces the most cars relative to its population compared to all countries in the world, with the Czech Republic coming second.

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Sources CHINA ASSOCIATION OF AUTOMOBILE MANUFACTURERS (2024). Au tomobile exports . Automobile Exports in December 2023. [online]. [cit. 2. 10. 2024]. Available at: http://en.caam.org.cn/Index/show/catid/68/id/2063.html CHINA ASSOCIATION OF AUTOMOBILE MANUFACTURERS (2024). Pro duction of Automobiles . Production of Automobiles in December 2023. [online]. [cit. 2. 10. 2024]. Available at: http://en.caam.org.cn/Index/show/catid/63/id/2003.html CHINA ASSOCIATION OF AUTOMOBILE MANUFACTURERS (2024). Pro duction of New Energy Vehicles . Production of New Energy Vehicles in December 2023. [online]. [cit. 2. 10. 2024]. Available at: http://en.caam.org.cn/Index/show/catid/65/ id/2027.html EUROSTAT (2024) EU trade since 1988. Import of EV to EU27 [online]. [cit. 6. 10. 2024]. Available at: https://ec.europa.eu/eurostat/databrowser/view/ds-045409$defaultview/ legacyMultiFreq/table?lang=en IEA (2024). Global EV Data Explorer . EV stock share. [online]. [cit. 20. 9. 2024]. Available at: https://www.iea.org/data-and-statistics/data-tools/global-ev-data-explorer IEA (2024). Global EV Data Explorer . EV sales share. [online]. [cit. 20. 9. 2024]. Avail able at: https://www.iea.org/data-and-statistics/data-tools/global-ev-data-explorer IEA (2024). Global EV Data Explorer . EV sales and China’s share. [online]. [cit. 2. 10. 2024]. Available at: https://www.iea.org/data-and-statistics/data-tools/global-ev-da ta-explorer IEA. (2024). Global EV Outlook 2024 . [online]. [cit. 22. 9. 2024] Available at: https:// www.iea.org/data-and-statistics/data-tools/global-ev-data-explorer INTERNATIONAL ORGANIZATION OF MOTOR VEHICLE MANUFAC TURERS OICA 2024 . Passenger cars production . Production statistics. [online]. [cit. 12. 9. 2024] Available at: http://www.oica.net/production-statistics/ INTERNATIONAL ORGANIZATION OF MOTOR VEHICLE MANUFAC TURERS OICA 2024 . Passenger cars registrations . Sales statistics. [online]. [cit. 12. 9. 2024]. Available at: https://www.oica.net/category/sales-statistics/ MARKLINES AUTOMOTIVE INDUSTRY PORTAL (2024). Automotive sales vol ume . China – Automotive sales volume. [online]. [cit. 15. 9. 2024]. Available at: https:// www.marklines.com/en/statistics/ ash_sales/automotive-sales-in-china-by-month MARKLINES AUTOMOTIVE INDUSTRY PORTAL (2024). Vehicle sales data. Automotive sales. [online]. [cit. 15. 9. 2024]. Available at: https://www.marklines. com/en/vehicle_sales/index UNITED NATIONS (2024). UN Comtrade Database . Trade balance of trade in mo tor vehicles for passenger transport. [online]. [cit. 14. 9. 2024]. Available at: https:// comtradeplus.un.org/

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UNITED NATIONS (2024). World Population Dashboard. Total population in mil lions. [online]. [cit. 13. 9. 2024]. Available at: https://www.unfpa.org/data/world-pop ulation-dashboard YAHOO FINANCE (2024). Top 20 Biggest Car Manufacturers by 2023 Revenue. [online]. [cit. 20. 10. 2024] Available at: https:// nance.yahoo.com/news/top-20-biggest-car-man ufacturers-121612000.html?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmN6L w&guce_referrer_sig=AQAAAEjUr3v0nWfopl_dMiFDVcikyFdC_QhKWwiHGlAP lctzQPvdb7f4dLAD0YZQsLeZWIuRqN-3RI9zABBS_vba6efJMIPNuXwqvw5x 4heLhRjPWG3OI_tLCw2rorkHLoHmrkUvxApPLEer__sI5y4iK-cINnrNBhI_yJ0zy0v VTJDW&guccounter=2 EV VOLUMES (2024) e largest EV manufacturers. Production of EV by brand. [on line]. [cit. 20. 10. 2024] Available at: https://www.fool.com/research/largest-ev-com panies/ EV VOLUMES (2024) Top twenty global EV sales by brand. Sales of EV by brand. [online]. [cit. 20. 10. 2024] Available at: https://ev-volumes.com/news/ev/what-was the-most-popular-ev-worldwide-in-2023/ EV VOLUMES (2024) Top ve OEMs in global EV sales. Sales of EV by OEMs. [on line]. [cit. 20. 10. 2024] Available at: https://ev-volumes.com/news/ev/what-was-the most-popular-ev-worldwide-in-2023/

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2 AUTOMOTIVE INDUSTRY IN THE EU

2.1 EU and global production capacities e production of motor vehicles in the European Union has returned to a growth trajectory after the downturn that resulted from the business crisis that peaked in 2009 and then in 2012 and 2013. However, the sector faced stagnation in 2018 and 2019 and even experienced a decline in some large member economies. With the onset of the COVID-19 pandemic, the automotive industry, like many other sectors, has experienced signi cant challenges. Restrictions and restrictive measures taken at national level have led to a signi cant slowdown or even a complete halt in production in some months of 2020, resulting in a 23.5% year-on-year decline in passenger car production in the European Union compared to 2019. In the case of the total number of motor vehicles produced in the European Union in 2023, i.e. including light commercial vehicles, trucks or buses, there was a 12% year-on-year increase, bringing production to 14.3 million units. EU motor vehicle production thus grew at its fastest pace in a decade. Global car production also grew by around 11% in 2023, the highest annual increase since 2015. Passenger cars account for 87.3% of all motor vehicles produced in the EU in 2023. An interesting statistic on motor vehicle production concerns the United States of America, where the share of passenger cars within the total number of motor vehicles is much lower (roughly 16% compared to 87% in the EU or 86% in China) than in other major economies. is is due to the great popularity of light commercial vehicles (light-trucks) in North America (which are not counted in passenger cars), and in terms of the powertrain used in these light commercial vehicles in 2023, they were 76.9% internal combustion engine, with hybrids in second place at 13.5%, pure electrics at 7.2% and plug-in hybrids at 2.4%. For more on the car market in North America, see omas H. Klier, James M. Rubenstein 2024. In 2023, China produced 26.1 million passenger cars, roughly 13.5 million more than the EU. e number of vehicles per thousand inhabitants also gives us some idea of the level of vehicle production. In the European Union, 31.9 motor vehicles per 1,000 inhabitants there were in 2023, practically on a par with the United States (where the gure was 31.7). Compared to Japan (72.3 motor vehicles produced per 1,000 inhabitants) or South Korea (82.1), this is less than half. In China, however, it is only 21.4 motor vehicles produced per 1,000 inhabitants.

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Table 2.1: Motor vehicle production in the EU and selected economies in 2023

Motor vehicles (ths.)

Motor vehicles produced per 1,000 inhabitants

Passenger cars (ths.)

Change 2023/2022

Change 2023/2022

EU

12,504 26,124

+11% 14,319 +10% 30,161 +2% 10,612 +18% 8,997 +8% 5,852 +14% 4,244 +11% 93,547

+12% +12%

31.9 21.4 31.7 72.3

China

US

1,745 7,765 4,784 3,909

+6%

Japan India

+15%

+7%

4.1

South Korea

+13% +10%

82.1

World 11.7 Source: European Automobile Manufacturers Association (ACEA); International Organization of Motor Vehicle Manufacturers (OICA); world and non-EU countries data population by the World Bank In 2023, Slovakia reached a production of 199 motor vehicles per 1,000 inhabitants, the second Czech Republic produced 129 motor vehicles per 1,000 inhabitants. ese indicators re ect the high concentration of car production in both countries and place them among the global leaders by this measure. is relative share of production per capita is thus an important indicator of the importance of the automotive industry not only for the national economies of these countries but also for the European economy. Table 2.2: Motor vehicle production in the EU in 2023 68,020

Change 2023/2022

Motor vehicles produced per 1,000 inhabitants

Country

Total (ths.)

Germany Spain France Czechia Slovakia Romania Hungary Belgium Portugal Sweden Italy Poland

4,109 1,907 1,027 1,398 1,080

+18%

48.6 50.7 22.1

+7% +2%

+15% +10% +15% +17%

129.2 199.0

542 299 513 507 285 243 277 123

15.0 16.7 26.9 52.9 28.1 30.2 26.3

+1%

+15% +17%

-5%

+16% +21%

Netherlands

6.9

28

Austria Slovenia Finland

102

-5%

12.5 28.7

61 30

-11% -59%

5.4 Source: International Organization of Motor Vehicle Manufacturers (OICA); population data by Eurostat e production of passenger cars is of great importance to the EU automotive industry Even though Member States’ economies started to recover in 2021 (EU GDP grew by 5.4%), the decline in passenger car production continued. In that year, production fell by 5.8% year-on-year, with total passenger car production reaching 10.479 million units. However, this decline was uneven across Member States, largely in uenced by the di erent levels of anti-epidemic measures taken. It was not until 2022, after several years of decline since 2017, when EU passenger car production peaked at 14.91 million cars, that production recovered, with EU passenger car production showing a 7.4% year-on-year increase, resulting in 11.25 million units. In 2023, EU passenger car production growth continued, up 11.2% from 2022. Even so, with 12,504,307 passenger cars, 2023 production was only at around 86% of 2019. Fig. 2.1: Development of passenger car production in the EU27 (million units)

Source: European Automobile Manufacturers Association (ACEA), OICA e growth of the automotive industry in recent years, even in the light of the events mentioned above, such as the economic and then pandemic crisis, has shown di erent dynamics in di erent EU Member States. France, for example, which after 2008 gradually began to lose its position as a major global automotive power, in 2019 only achieved around two-thirds of its 2007 production. is decline represented almost one million passenger cars. Italy, Belgium, Sweden and Poland saw similarly

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signi cant declines in production. In contrast, the automotive industry in some former Eastern Bloc countries, such as Slovakia and the Czech Republic, prospered. e Czech Republic ranked fth in the EU in 2019 with a production of 1.4 million motor vehicles, even reaching fourth position in passenger car production. e countries of Hungary and Romania have been able to successfully attract automotive companies thanks to their skilled and relatively cheap workforce, as well as their low corporate tax rate, and have thus become major players in the growth of car production. In 2023, the Czech Republic has consolidated its position as the third largest producer of passenger cars in the European Union with 1,398 thousand passenger cars (a year-on-year increase of 15%). However, the largest producer of passenger cars in the EU is by a wide margin Germany (4,109 thousand) ahead of Spain (1,907 thousand). Slovakia narrowly edged out France to become the fourth-largest car producer in the EU. Slovakia and the Czech Republic are exceptional in the relative importance of the car industry, which is strongly re ected in per capita production. e growth in passenger car production in 2023 was mainly in the more important passenger car production, while the decline was rather in countries where the production of passenger cars is „only“ in the tens to lower hundreds of thousands per year, such as in Finland (59% year-on-year decline) or Slovenia (-11%) or Austria and Portugal (-5% each). is also points to a certain centralisation of production into a few major countries in the production of passenger cars within the EU.

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Fig. 2.2: Passenger vehicle production (in thousands; and % change from 2022) in EU countries and the UK in 2023

Source: International Organization of Motor Vehicle Manufacturers (OICA), own calculation In recent years, there has been a certain shift in passenger car production capacity between some EU Member States. ese changes are re ected in changes in the shares of total passenger car production within the EU. While some traditional automotive powers have experienced rather stagnating or declining production, Slovakia and the Czech Republic have managed to signi cantly expand their production capacities and become among the leading European producers. Germany retained its position as the largest passenger car producer in the EU in 2023 with a 32.9% share of total production. Spain followed in second place with a 15% share. e Czech Republic ranked third with a share of 11.2% of total passenger car production.

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ese shares not only re ect the degree of adaptation of production capacities in each country, but also their success in adapting to changing conditions and demands of the automotive market. e growth of production in Slovakia and the Czech Republic shows the ability of these countries to attract investment and e ectively use their capacities for the bene t of the domestic automotive industry, while the stable share of Germany and Spain con rms their long-term strong position within the European automotive market. Fig. 2.3: Share of passenger car production in EU Member States (%)

Source: ACEA, share of total passenger car units

Fig. 2.4: Development of passenger car production of the six largest EU manufacturers (million units)

Source: European Automobile Manufacturers Association

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2.1.1 The importance of the automotive industry in terms of GDP in the EU e importance of the automotive industry can be assessed not only based on the volume of production and export of motor vehicles, but also through its share in the gross value added (GVA), related to both the gross domestic product (GDP) of the country and the gross value added of manufacturing industry (CZ-NACE C). is classi cation includes the division Manufacture of motor vehicles (except motorcycles), trailers and semi-trailers (CZ-NACE 29), which is one of the key components of the manufacturing industry in several European countries. e average share of automotive GVA in GDP in the European Union was 1.4% in 2022. However, in some Member States this share was signi cantly higher, re ecting the signi cant impact of this sector on their economies. e Czech Republic returned to the top position in 2022 with the highest share of automotive GVA (excluding the impact of other subcontracting industries) in GDP at 3.6%. Slovakia, which dominated this ranking in 2020 and 2021, together with Germany, traditionally considered one of the leaders of the automotive industry, achieved a share of automotive GVA in GDP of 3.3% in 2023. In the case of the share of automotive GVA in manufacturing GVA, the EU average is 9.1%. e highest shares are again reported by the Czech Republic (18.6%), Slovenia (18.0%) and Germany (17.9%). ese di erences between countries re ect not only the di erent size and structure of economics but also the speci c position of the automotive industry within their manufacturing sectors. Table 2.3: Automotive gross value added (GVA) as a share of GDP and manufacturing GVA in the EU (2022)

Automotive GVA/ GDP

Automotive GVA/ Manufacturing industry GVA

Country

Czechia Germany Slovakia Hungary Sweden Romania Slovenia

3.6 % 3.3 % 3.3 % 2.6 % 2.0 % 1.8 % 1.2 % 1.1 % 0.9 % 0.8 % 0.8 % 1.4 %

18.6 % 17.9 % 18.0 % 15.3 % 14.5 % 11.5 % 6.1 % 6.6 % 7.8 % 5.0 % 4.9 % 9.1 %

Poland

Spain

Austria

Italy

EU

Source: Eurostat

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e evolution of the share of GVA of purely the automotive industry (excluding subcontracting industries) in GDP in the Member States that are the largest producers of passenger cars in the EU shows some interesting uctuations and trends - a decline due to the reverberations of the economic crisis in 2012 and 2013 and the pandemic after 2020, the declining importance of France in the automotive industry, and on the contrary, the growing in uence of the automotive industry, especially in Slovakia, and the volatility of the Czech Republic. Fig. 2.5: Development of the share of gross value added (GVA) of the automotive industry in GDP for the largest passenger car manufacturers from EU countries

Source: Eurostat; only the section Manufacture of motor vehicles (except motorcycles), trailers and semi-trailers

2.1.2 The growing importance of foreign trade in motor vehicles in the European Union

Automobile production in the EU is, among other things, a very important component of foreign trade at European and global levels. However, in 2020, both imports and exports of passenger cars from countries outside the European Union have fallen signi cantly because of the COVID-19 pandemic. is decline was re ected both in reduced trade value and in fewer vehicles traded. e pandemic had a signi cant negative impact on international car trade. Restrictions and disruptions to logistics chains have a ected not only trade ows themselves but also product distribution, with the decline in global demand particularly evident in the rst half of 2020. 2021, however, brought a recovery in international trade and an increase in both the value and quantity of cars traded, helped, among other things, by a lower comparison base in the previous year. is positive trend continued in 2022, when trade in motor vehicles showed a further recovery. In 2023, passenger car exports from the EU prospered, reaching € 176.63 billion, representing 1.04% of EU GDP and a 12%

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