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Automotive Industry in the Austrian neighborhood faces a tough environment

May 19, 2010

Austrian Automotive Industry closely linked to Central- and Eastern Europe

The Austrian automotive industry is closely linked with their peers in the neighboring countries of Slovakia, Czech Republic and Hungary. Nearly 5 percent of the world-wide car production is located within a radius of 200 miles of the Austrian capital Vienna. The cooperation with Central- and Eastern European (CEE) countries is important not only to strengthen the Vienna Region as an "Automotive Region" but also to develop it into a "One-Stop-Supplier-Shop" for automobile production needs in the region in the long term. That is also the reason why Austria pays a special importance to industry developments in this area. This is how the Austrian economists evaluated recent developments:

The automotive sector in CEE countries was amongst the most affected by the financial crises, especially during 2009. According to the recently released data from the OICA , International Organization of Motor Vehicle Manufacturers CEE countries suffered a drop in production of half a million vehicles (-12%). The region was however able to increase its share in total European production, despite the sharper impact of the crisis on their economies. The crisis accentuated the speed of the restructuring of the sector, and the West-East substitution of production continued.

Despite the automotive sector is characterized by huge spare capacity, many OEMs are still expanding their capacity in CEE (Fiat in Serbia, Mercedes in Hungary, VW in Slovakia, Bosch moving from Wales to Hungary, Renault and Toyota investing in Turkey, etc.). These trends fair well for the future of the sector in CEE.

Russia and Ukraine were an exception: their economies were particularly affected by the crisis in 2009. Their automotive sector is less efficient and less export-oriented, automotive production in both countries collapsed. The production plunged by 1.5 Mio units to only 800.000 vehicles.