Money Buzz! Europa

Tag: automotive

  • Renault and Stellantis to suspend car production at several plants

    Renault and Stellantis to suspend car production at several plants

    Automakers Renault and Stellantis announced that they will suspend car production at several plants due to a global semiconductor shortage.

    A spokesman for Renault said that during the next week, the group will suspend production at a plant in France and two other plants in Morocco and Romania for several days.

    Stellantis, the group resulting from the merger between the French manufacturer PSA and the Italian Fiat Chrysler, also faces a similar problem.

    Due to the lack of chips, the group decided to suspend production at the plant in Eisenach (Germany) where Opel cars are produced as well as at the plant in Zaragoza (Spain), where Citroen and Opel models are assembled.

    Other big automakers around the world, including Ford, Toyota and Volkswagen, are facing a shortage of chips that are used in various car systems.

    On average, a car uses between 50 and 150 chips. These chips are produced in Asia, mainly in Taiwan.

  • Fiat Chrysler Automobiles to invest two billion euros in Poland

    Fiat Chrysler Automobiles to invest two billion euros in Poland

    Fiat Chrysler Automobiles (FCA) will invest two billion euros ($ 2.45 billion) in its plant in Tychy, Poland, Deputy Prime Minister Jaroslaw Gowin announced on Twitter on Tuesday.

    From the second half of 2022, FCA wants to start manufacturing electric and hybrid vehicles in Poland.

    The company will expand and modernize the factory in Tychy, Silesia’s industrial region, where cars will be produced under the Jeep, Fiat and Alfa Romeo brands.

    The Polish subsidiary of Fiat Chrysler currently manufactures Fiat 500 and Lancia Ypsilon cars, and has about 2,500 employees.

    For the period 2018-2022, FCA has committed to invest nine billion euros in electrification, and the total value of investments is 45 billion euros.

  • Romania will have the fastest recovery of car sales in Central Europe

    Romania will have the fastest recovery of car sales in Central Europe

    Romania could record the largest decrease in sales of new passenger cars and light commercial vehicle (LCV) in Central Europe this year, of 24.3% compared to 2019, but will have a rapid recovery exceeding the pre-COVID crisis volume threshold until 2023, according to Autofacts report made by the PwC network at European level, based on IHS Markit data.

    Thus, estimates for the new cars and light commercial vehicles markets in Romania show a decrease from 181,000 units in 2019 to 137,000 units this year and, subsequently, an increase to 223,000 units in 2023.

    In Central Europe, Romania will have a decline comparable to Poland, which will also record a decrease of 24.3%. But Poland is estimated to have a slower recovery, and will remain below the level of 2019 in 2023.

    Thus, the smallest decrease would be registered by Hungary, of 19.6%, followed by Slovakia with 21.4% and the Czech Republic with 21.6%. Of these markets, only Slovakia will recover this year’s losses, and in 2023 car sales will exceed the level recorded in 2019.

    Overall, the market in Central Europe will decrease by 23% this year, reaching the level recorded in 2016, of 900,000 vehicles. In comparison, estimates for Western European markets show a contraction of 26%.

    Auto production development in Romania

    Regarding the production of vehicles in Romania, Autofacts and IHS estimates show a decrease of 16.3% this year, to 410,000 units, and an exponential increase until 2027, to 794,000 units, based on the plans of the two manufacturers – Ford and Renault.

    In 2019, Ford launched the production of the new Puma at the plant in Craiova and plans to add LCV volumes. In turn, Renault intends to increase the production volume of its plant in Pitesti, which, in addition, is expected to record the largest capacity utilization among factories in Central Europe.

    Romania ranks third in Central Europe after the decrease in car production this year, at the same level as Slovakia, by 16.1%. The steepest decline is expected for the Czech Republic, of 23.7%, followed by Hungary, with 18.5%. Polish production, on the other hand, will be the only one to grow slightly, with an estimated increase of 3.5%.

    Following the sharp decline in the second quarter, assembly volumes in Central Europe may generally fall by 22% by the end of the year.

    However, changes in models in European producer networks, a focus on light commercial vehicles in Central European factories and the launch of electric vehicle models could have a positive impact on the potential for production to return from 2024, according to Autofacts.

    Regarding the production of electric and hybrid vehicles in Central Europe, its prospects are positive, the share of assembly will reach 28% by 2027, from about 2% in 2019. However, it will be below 41% in Western Europe.

  • Czech automotive industry experienced a slight recovery in June 2020

    Czech automotive industry experienced a slight recovery in June 2020

    The Czech automotive industry experienced a slight recovery in June 2020, yet 32.5% fewer motor vehicles produced this year than in 2019.

    In June, bus manufacturers Iveco CR and SOR Libchava were particularly successful, achieving a significant growth of 12.7%.

    Cars

    A total of 503.615 passenger cars were produced in Czechia in the first half of the year, which is 32.6% less than in the same period of 2019.

    Skoda produced 337.580 (- 28.2%). The gradual increase in production caused by the coronavirus pandemic contributed to a gradual increase in its production in June, when the carmaker produced 73.991 more vehicles compared to previous months.

    Nošovický Huyndai produced a total of 96.390 cars (- 39.9%) in the first half of the year, while TPCA produced a total of 69.645 cars, 40.3% less than in the first half of last year.

    Buses and trucks

    In June 2019, Vysokomýtské Iveco produced 37 more buses than in June 2019. SOR Libchavy increased production by 73.3% in June and produced 223 buses.

    Together with KH Motor Centrum Opava, which has produced 9 buses since the beginning of the year, all manufacturers produced 516 buses in June (+ 12.7%).

    Tatra produced a total of 628 trucks in the first half of the year, 143 more than in the first half of last year (i.e. + 29.5%).

    Motorcycles

    The only motorcycle manufacturer, Týnecká JAWA, produced 249 motorcycles in the first half of the year. Compared to the previous year, it saw a decrease in production of 637 units (- 71.9 %).

    Trailers and semi-trailers

    The segment of trailers has not suffered much from the coronavirus pandemic so far.

    Total production in all categories increased slightly by 1.9% in the first half of the year to a total of 15.454 trailers.

    The positive development is mainly due to the increase in production of small trailers produced by Agados to a total of 14.363 vehicles (+ 2.5%).

    Schwarzmüller was successful in the category of large trailers with 908 units produced for January to June (+ 0.5%).

    PANAV, on the other hand, recorded a decrease, both in the trailer category (135 pcs; – 19.2%), and semi-trailers (48 pcs; – 38.5%).

  • Slovak car production was less than half of its last year’s production in May

    Slovak car production was less than half of its last year’s production in May

    Despite the fact that the performance of Slovak industry in May 2020 compared with April 2020, increased by almost 20 %, the total industrial production of the Slovak Republic reached only two thirds of the volume compared with last May. 

    In May, industrial production decreased by 33,5 %, year-on-year. The development was affected by a drop in manufacturing by 37,6 %, in electricity, gas, steam and air-conditioning supply by 5 % and in mining and quarrying by 9 %.

    The overall result was most significantly affected by the year-on-year drop in the production of transport equipment was by 56,9 %. The overall result was also favorably affected by high growth in the production of coke and refined petroleum products, which, however, is related to last year’s production shutdown of one of the large producers.

    From the total of 3 sections and 13 specific groupings of the industrial sectors, 8 groupings recorded a larger decrease in May by 25 %.

    As regards the specific groupings of the industrial sectors, which contributed the most to the total production fall, the most significant decrease was recorded in manufacture transport equipment by 56,9 %, manufacture of rubber and plastic products and other non-metallic mineral products by 35,5 %, manufacture of basic metal and fabricated metal products except machinery and equipment by 32,6 %, manufacture of electrical equipment by 42,2 % and manufacture of machinery and equipment n.e.c. by 32,8 %.

    The whole production was affected by a growth in manufacture of coke and refined petroleum products by 125,2 % which is, however, due to the last year´s low performance of the sector.

    Compared with May, in terms of the main industrial groupings, production of investment goods dropped by 48,9 %, production of durable products by 39,8 %, production of intermediate goods by 31,4 % and production of non-durable consumer goods by 19,3 %. Production related to energy was higher by 6,5 %.

    After seasonal adjustment, industrial production increased by 19,7 % in May 2020 compared with April 2020.

  • Poland produced only 400 passenger cars in April

    Poland produced only 400 passenger cars in April

    Poland auto factories produced only 400 vehicles in April 2020, latest Central Statistical Office data show.

    Passenger car output fell by 99% year on year in April 2020. In monthly terms, passenger car production also went down by 97.9 percent in April.

    In the first four months of 2020, the number of passenger cars produced in Poland reached 100.000 down by 35.7% year on year.

    The automobile industry is accounting for about 11% of Poland’s industrial production. Poland is one of the largest producer of light vehicles (passenger cars) in Central and Eastern Europe.

  • Forced transformation of automotive industry after Covid-19

    Forced transformation of automotive industry after Covid-19

    In Romania, the first wave of industries affected by COVID-19 was linked to the ones that required human mobility, such as transportation, hospitality, or tourism. The second wave is now taking place in automotive and manufacturing, that need to reinvent themselves and try to go back to something as close to normality as they can, show Mazars.

    The Romanian automotive industry, made of ~600 companies with approx. 230,000 employees, represents a significant part of the economy including both production of cars, the most important ones being Dacia and Ford, and the production of car components with important players like Faurecia, Valeo, and Continental.

    According to ACAROM (The Association of Romanian Automotive Manufacturers), the production of cars and car components reached in 2019 approx. 30 BEUR (+3% increase compared to 2018), generating 14% of PIB and 27% of the total export. The production of auto units reached 490,000 units from Dacia and Ford together during 2019, aiming in 2020 for almost 700,000 units.

    March 2020 – a milestone in the automotive’s history page

    The automotive industry advance stopped, and the production came to an almost complete standstill in March 2020 due to serious threats generated by the COVID-19 pandemic.

    Dacia shut down production starting with 19th March and 13,500 employees out of a total of 14,000 were sent into technical unemployment. Dacia began gradually restarting its production on 21st April, aiming to reopen the entire factory on 4th May. Similarly, 6,000 employees from Ford went into technical unemployment from 19th March until 4th May.

    Stopping the national and international car production led also to an almost full stop of the local car components production – being perceived for the moment as the most affected industry in Romania, due to COVID – 19 challenges.

    Resuming the production, but with great caution

    The particularity of the Romanian automotive industry is a high concentration of employees in a definite working place, often thousands of them are working together in an 8-hour shift. “The local automotive companies that resumed their production must go through great changes not to jeopardize the health of their employees. Investments are needed to be incurred to guarantee a high degree of personal hygiene, distancing within workplaces, the ability of fast identification of employees at risk, and isolate those who may be infected.”, mentioned Ionuţ Vintilă, Senior Manager, Audit & Assurance, Mazars Romania.

    Certain production processes will be affected and need to be re-designed to comply with the mandatory distancing between employees. Other regulations must be considered when talking about the transport of employees to/from the factory, which are located in rural Romania, the dynamic within factory premises (from the gate to the workplace), as well as the behavior of the employees during breaks. In addition, special

    measures must be taken when securing the supply chain to cope with local and European travel restrictions for imports of raw materials and exports of finished goods. One particularity of this industry, such as the high degree of automation in production, will certainly help to maintain the desired safety distances.

    The automotive companies must be aware that if an outbreak of COVID-19 infection is identified in a plant, then there is a high possibility that the plant will be closed down by health authorities for a long period.

    Next steps and the forced transformation of the automotive industry

    It may take years for the global automotive industry to return to pre-crisis volumes. While a smaller decline in sales compared to the previous year is expected in the second half of 2020, the industry could undergo far-reaching changes.

    According to Dr. Christian Back, Global Head of Automotive at Mazars, “COVID-19 could have a diverse and long-term impact on the global automotive industry”.

    For decades, the automotive industry has focused on optimizing working capital. What was considered optimal in terms of financing and lean management is now being reconsidered by many automotive companies in terms of production capability. Supply chains are strongly controlled by the OEMs and it remains to be seen to what extent the OEMs will now push for greater regionalization of supply chains to reduce dependency on international partners.

    “However, the consequences of global crises and worldwide production lockdowns cannot be solved in this way”, adds Dr. Back. Some OEMs are currently rethinking their procurement strategies: potentially switching from one supplier per component to two or even more. This would make OEMs be better prepared in the case of further production lockdowns and individual supplier shortages.

    The COVID-19 experience could offer new opportunities to the automotive industry. Travelers could again prefer individual travel options, as the use of public transport is associated with a higher risk of infection. Or they could ask for the introduction of new in-car products, such as anti-virus functions as part of the air conditioning system, for instance.

    According to the epidemiologist’s community, it is now more and more clear that we are at the beginning of the COVID-19 pandemic, that could last for years to come. Second and even third waves are expected in Autumn 2020 and Spring 2021.

    Fiscal measures with impact on cash optimization

    If we take a look at the fiscal area, we notice that the evolution of the pandemic has determined governments around the world to take quick measures to support the business environment. The European Commission considers the COVID-19 pandemic to be „an unusual event that is out of the government control”.

    In turn, the Organisation for Economic Co-operation and Development – OECD has proposed to governments and tax administrations packages of measures to mitigate the negative impact of the virus: deadlines postponement for filing tax returns and obligations, suspension of penalties/ default interest, suspension of tax controls or enforcement measures, accelerating VAT refunds.

    „The measures taken by Romania are similar to those implemented by other states affected by COVID-19 and are certainly beneficial to the automotive industry. We can mention here the technical unemployment indemnity, the possibility of postponing the payment of fiscal obligations during the state of emergency when most factories in the automotive sector have closed their doors or the bonus granted for the payment of profit tax for the first quarter of 2020, as well as VAT refunds without control.”, mentioned Alexandru Stanciu, Manager, Tax Advisory, Mazars Romania.

    „Companies must also consider the extent to which they can benefit from the tax facilities already provided by law, such as the additional deduction of research and development expenses when calculating the profit tax, the tax exemption of the reinvested profit or the tax credit related to sponsorships. This is also a good time to identify ways to optimize cash flow. Thus, companies with import operations can apply for a certificate of deferral of VAT payment at customs or for the certificate of the authorized economic operator (AEO), the latter having both an impact on cash optimization (guarantee exemption) and in relation to the customs authorities, offering a privileged status.”, mentioned Bianca Vlad, Partner, Tax Advisory, Mazars Romania.

    We expect an acceleration of the digitization process, including at the level of tax authorities, the implementation of technology proving to be essential within the tax administration at a time when the interaction between authorities and taxpayers is limited by the restrictions imposed by the state of emergency.

  • ZKW at 1.25 billion euros in revenue and over 10.000 employees

    ZKW at 1.25 billion euros in revenue and over 10.000 employees

    • At the end of 2019, ZKW Group employed around 10,000 people at 10 locations in eight countries.
    • The plant in Silao, Mexico, which went into operation in 2015, will be expanded by 19,000 square meters of production space by the end of 2020.
    • The ZKW Group’s revenue was maintained at 1.25 billion euros despite difficult conditions in the international automotive industry.

    ZKW Silao plant to be expanded

    Construction began in November 2019 to expand the current area of the ZKW plant in Silao from 22,000 to 41,000 square meters. The extension will be equipped with state-of-the-art technologies for the manufacture of innovative automotive lighting systems – such as plastic injection molding systems, hard coating for the coating of plastic diffusing lenses, painting systems, metallization equipment for reflectors, and headlight assembly lines.

    Completion is scheduled for October 2020 with start of production scheduled for August 2021. The number of employees is to rise from 700 at present to around 1,400.

    ZKW is investing around 67.5 million euros at its Mexico site.

    High-quality headlamps for premium car manufacturers such as BMW, Daimler, Ford Lincoln, GM, Navistar, Nissan Infiniti, VW and Volvo are produced in Silao.

    New Subsidiaries in Asia

    Since last year, the lighting systems manufacturer has had a branch in Incheon, Korea. The former location of LG Electronics serves the development and distribution of rear lamps for the automotive market in the Asia-Pacific region.

    The LG site in Ningbo, China, where rear lamps are produced, was also integrated.

    Furthermore, ZKW expanded its plants in Slovakia and Mexico with additional capacities. Altogether, more than 210 million euros will be invested.

    At the company headquarters in Wieselburg, Austria, a new logistics center and development laboratory will be built starting in April 2020.

  • Most automakers disappointed by smart cars profits

    The auto industry invested many billions of dollars to design and develop vehicles for connected, autonomous, shared and electrified (or, in industry parlance, CASE) mobility, but they have been disappointed by the profits from these investments, according to PwC global Automotive trends 2019 report.

    In this context, the auto industry must find a way to balance accelerating innovation and financial survival, until the direction of development becomes clearer.

    “Connected cars are already ubiquitous and electric cars are gaining in popularity, but autonomous and shared vehicles are still a futuristic bet. Most of the automakers who based their strategies on the idea that a revolutionary change in the automobile and invested billion of dollars in the past decade have been disappointed by the profits even when their expectations were conservative. It is impossible to predict precisely what types of vehicles will be leading the market a decade from now. That’s why, they shouldn’t abandon their long-term strategies for CASE, but they should temper them with short-term realism, especially when the pressure comes from the need to process automation and robotization”, said Daniel Anghel, Partner and TLS Leader PwC Romania.

    The main conclusions of the PwC report

    During the next ten years and beyond automakers will be compelled to corral factory costs, primarily because the fulsome research and development and M&A outlays they made in order to design and develop entirely new kinds of automobiles could cut deeply into potential profits. As a result, the role of robotics and automation in factories will rise exponentially.

    The pressure on cost reduction and automation will will likely slash the global auto industry workforce at least in half by 2030. Moreover, there is likely to be further consolidation before the direction of the auto industry becomes clearer. Today, there are more than 20 global automakers; by 2025, there may be only half that number.

    PwC realized three scenarios for the auto industry in 2023, in which the market value will reach the same value of USD 2.6 trillion, from USD 2.2 trillion in 2018, only that the profit margins are different.

    In the first scenario, the electric vehicle development is fast-paced and the margins are 4-4,4%. In the second scenario automakers delay investment, cutting their current electric vehicle production plans by about half and the margins will be 5,1–5,5%. In the third scenario that represents a future with difficult market conditions and big investments, the margins will be 3-3.4%.

    Other conclusions of the report

    • Successful approaches should involve the same overarching principles: a more specialised portfolio, a more focused value proposition, more rigorous financial management, and more willingness to collaborate with other companies, particularly in CASE-oriented innovation and capital investment.
    • Following automation and robotization, companies will have to change their recruitment policies.
    • The number of required data engineers will expand by 80% or more in some automobile factories, while the number of software engineers needed will expand by as much as 90%.
    • The time required between R&D and the point of production could shrink from three to five years today down to two years or so, in order to keep pace with technological and design changes.
    • The auto factories of the future will fall into two categories: one will be a highly automated ‘plug and play’ plant producing large volumes of cars with minimal variations among vehicle types for the discount arena; the other will produce customized, premium vehicles — including, but not limited to, those for the combustion engine, electric and autonomous markets.
    • Investment in innovation and product introduction is projected to continue to rise an estimated 59% through 2023, with the fastest growth by far in electric and autonomous vehicles.
    • The development of CASE vehicles will be more profitable for companies that make sensors, batteries, propulsion software, and infotainment and connectivity programes.
    • The time until autonomous cars will run in large numbers on the roads became difficult to estimate.