Vehicle output rebounds growing by 5.1% y/y to 756,468 units in Czech Republic

The output of passenger cars and LUVs recovered in H1 as it expanded by 5.1% y/y to 756,468 units in H1, the Czech Automotive Industry Association SAP announced on Thursday. Skoda Auto reported the strongest pace of expansion of its output of 13.5% y/y to 459,526 vehicles in H1, thus remaining the largest car manufacturer in the country. The output of Hyundai increased by 0.6% y/y to 188,800 vehicles, while the output of TPCA dropped by 14.8% y/y to 108,142 units in H1. Thus, Skoda accounted for 60.7% of the vehicle output in H1, Hyundai — for 25%, while TPCA – for 14.3%. SAP president Bohdan Wojnar said that in June alone the vehicle output increased by 4.7% y/y – he noted that the automotive industry continues its solid growth and continues driving the Czech industry and economy, despite the growing labor shortages. Wojnar also said that he expects the development of the automotive industry in the second half of the year to remain positive thanks to the interest in the produced in the country vehicles on key markets.

Overall, we expect the automotive sector to continue expanding in the rest of the year, thus to remain main driver of the overall industrial output and exports growth, and consequently, of the economic expansion, growing employment and incomes. Skoda moved to 6-day working week as of January to meet strong demand for its cars and 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 earlier announced it will operate at full capacity of 350,000 vehicles this year after producing 358,400 cars last year. Note however that Wojnar has earlier said that this year’s increase in vehicles’ output is to slow down to some 5-6% as compared to the last year’s 8% due not only to the expected weaker demand, but also increasing shortages of labor force and its limited ability to migrate. Wojnar has also recently said that the education system needs to be reformed with a view to focus more on mathematics and sciences to prepare workers for the future needs of the automotive industry. SAP has also previously warned that the pace of car output expansion cannot be expected to accelerate much in the near term as Skoda and Hyundai are operating almost at full production capacity potential.

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