In Czech Republic vehicle output expands by 8.3% y/y

The output of passenger cars and LUVs rose by strong 8.3% y/y in 2016 to a new record-high 1,344,182 vehicles in the period, thus speeding from the 8.2% y/y expansion reported in Jan-Nov, according to data by the Automotive Industry Association SAP released on Tuesday. Thus, the 2016 print exceeded SAP’s projections for car output to top 1.3mn units last year. Skoda Auto reported the strongest pace of expansion of its output of 12.5% y/y last year and accounted for 56.9% of total output, up from 56.4% share in the eleven months of the year. The pace of expansion of output of TPCA slowed down to only 0.7% y/y in 2016 from to 3.4% y/y in Jan-Nov and it accounted for 16.4% of total output, while that of Hyundai – to 4.7% y/y from 6.2% y/y in Jan-Nov, thus having produced 26.7% of total car output. Exports of Czech car makers rose by 8.6% y/y to 1.6mn vehicles last year and domestic sales went up by 4% y/y to 104,163 units.

The robust headline car production growth pace and the new record-high output last year indicates that the automotive sector has remained the main driver of domestic industry and exports, and hence of GDP growth. The automotive sector output may be expected to continue expanding at robust pace also this year as the largest domestic car maker Skoda has moved to 6-day working week as of January to meet strong demand for its cars; moreover, it plans to invest CZK 7.2bn into the expansion of its Kvasiny plant by 2018, which will allow increasing the plant’s production capacity to 280,000 vehicles annually over the next few years. Hyundai has also announced it will operate at full capacity of 350,000 vehicles this year after producing 358,400 cars last year.

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