Vehicle production rebounded increasing by 4.4% y/y (wda) in March, but failed to erase the cumulative 23.5% y/y (wda) contraction reported in December-February, according to figures of the association of automotive producers AutoSAP. The revival was driven by car exports that increased by 4.8% y/y wda in the month, while domestic sales remained on the negative territory falling by 4.6% y/y wda to reflect worse consumer sentiments amidst growing external uncertainty.
In January-March, vehicle output fell by 3.77% y/y, down to 363,052 units, while exports were lower by 3.07% y/y. There was an increase in production of buses (up 6.66% y/y) and several times increase in production of motorcycles (on a very low base). As far as passenger cars are concerned, Skoda preserved its leading position, responsible for 63.7% of output in January-March, followed by Hyndai (20.1%) and TPCA (16.2%).
Overall, the automotive sector is not doing very well in Q1’19. Automotive producers have explained part of the slowdown with heavier environmental standards, but high labor costs have also been put forward, as well as labour shortages. As the sector is still close to (if not at) full capacity, it will be difficult to achieve further expansion without serious investment in automatization and capacity expansion, we think.