Passenger car production grows by 0.1% y/y in Czech Republic

Passenger car production grew by 0.1% y/y in January-August, up to 941,931 units, according to figures of AutoSAP, the association of car producers. Domestic demand had a more notable contribution over the period, reporting an increase of 1.1% y/y, compared to only 0.1% y/y for export-oriented output. Skoda still dominated production as the most popular car make, with a growth of 2.7% y/y over the period, while Hyndai continued to post poor performance, down by 7.3% y/y. Total vehicle production thus reached 946,473 units in January-August, higher by only 0.1% y/y, largely because of domestic demand, where output was higher by 1.3% y/y.

Among other vehicle types, output of commercial vehicles fell by 48.0% y/y in January-August, primarily because of the ongoing decline of Tatra production. Bus output did increase, however, by 8.5% y/y, mostly due to Iveco (up 7.3% y/y). Finally, motorcycle production was down 4.2% y/y, with Jawa Moto not having a lot of capacity to expand output.

Data still indicate that capacity for expanding output to meet demand is limited. Automotive producers have been complaining of labor shortages for a while, which has hampered growth. The situation has reached the point where larger producers, like Volkswagen, are trying to shift some of production to more expensive locations for the sake of increasing output. Skoda has been resistant to this at this point, but we doubt it is the only producer with such problems. If the situation doesn’t improve, there may be some outsourcing done, which will reduce long-term growth prospects for the sector.

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