Major strengths of the Slovakian automotive industry are its close proximity to core export markets in Europe, low labour costs, and government support.
- Slovakia´s automotive industry broke a record in 2015, producing more than a million cars for the first time. The country is the global leader in car production per capita (184 cars per 1,000 inhabitants in 2015). Automotive accounts for 45% of Slovakia´s manufacturing activities and 35% of exports. In H1 of 2016 the sector continued to benefitted from rising car sales in Europe, while domestic car sales remain robust.
- Jaguar Land Rover has decided to build a new plant in Slovakia with production expected to start in 2018 (150,000 cars per year planned at the start). This will further increase demand from local car parts suppliers.
- Major strengths of the industry are its close proximity to core export markets in Europe, low labour costs, and government support.
- Profit margins of vehicle manufacturers are expected to increase further in the coming months due to robust sales, lower costs for steel and plastics and improving efficiency in the production process.
- Depending on the level in the supply chain, payment duration in the automotive sector ranges between 30 days and 60 days. Payment behaviour is generally good with a low number of non-payment notifications, and this is expected to remain unchanged in the coming months. The insolvency level in this industry is expected to remain low after decreasing over the last six months.
- Our underwriting stance remains open, given the low payment default and insolvency level in this industry. Market conditions are expected to remain favourable. However, due to its high export dependency, the Slovakian automotive sector remains highly susceptible to adverse developments in the global car market, e.g. a major slump in demand in the eurozone and/or China.
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Market Monitor Automotive October 2016
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