automotive fact pack

1

THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT INDUSTRY

CZECH REPUBLIC

Fact Pack

Swedish Trade Council in the Czech Republic

2006

2

Overview Czech Manufacturing Industry

Czech Automotive Industry

Czech Construction Equipment Industry

Recommendations

References

CONTENT

3

0 50 100 150

Metalproducts

Machineengineering

Food andtobacco

Electrical andoptical

Automotive

THE MANUFACTURING INDUSTRY IN THE CZECH REPUBLIC IS WORTH ABOUT 2/3 OF THE SWEDISH MANUFACTURING INDUSTRY- the automotive industry has a dominant position

• The total turnover of the Czech manufacturing industry is SEK 914 billion

− the Swedish manufacturing industry’s turnover is SEK 1 357 billion

• There are approximately 8 200 companies within the manufacturing industry in the Czech Republic

− 1.4 million employees

• The automotive, electrical and optical equipment industries are traditionally strong

• The average labor cost for an industry worker in the Czech Republic is SEK 43 per hour

5 largest manufacturing industries in the Czech Republic

Billion SEK

The automotive industry amounts to 15.4 % of the total manufacturing industry

Source: Ministry of Industry and Trade, Confederation of Finnish Industries

4



Passenger Cars

Commercial Vehicles

Suppliers


Recommendations

References

CONTENT

5

THE CZECH AUTOMOTIVE INDUSTRY TOTALS SEK 155 BILLION- the industry grew by more than 24 % in 2005

0

10

20

30

40

50

60

70

2000 2001 2002 2003 2004 2005

Export Domestic

Vehicles and engines

SEK 58 billion

Trailers and semi-trailers

SEK 2 billion

Components and

accessories

SEK 95 billion

billion SEKTotal production Automotive industry in the Czech Republic

Growth is driven mainly by exports

Source: Czech Ministry of Trade, Czech Statistical Office, HN, July 19, 2006* Annual average exchange rates provided by the Swedish Riksbank:

year

Production Vehicles and Engines in the Czech Republic

6

OVER 600 000 VEHICLES ARE PRODUCED IN THE CZECH REPUBLIC- from which more than 500 000 vehicles are exported each year

VEHICLE MANUFACTURERSVEHICLE MANUFACTURERS

LIGHT TRUCKS( 1,200 vehicles)

LIGHT TRUCKS( 1,200 vehicles)

3 manufacturers Karosa (1,900) Ekobus (50) SOR Libchavy (300)

BUSSES( 2,200 vehicles)

BUSSES( 2,200 vehicles)

HEAVY TRUCKS( 2,100 vehicles + 2,500 trailers)

HEAVY TRUCKS( 2,100 vehicles + 2,500 trailers)

(Weight > 6 t) 2 manufacturers

Tatra (1,500) Avia (500)

Trailer manufacturers Schwarzmuller (1,400) Panav (1,000) Metaco Bo. Br (200)

COMMERCIAL VEHICLES (8,000 vehicles)COMMERCIAL VEHICLES (8,000 vehicles)

PASSENGER CARS( 610,000 vehicles)

PASSENGER CARS( 610,000 vehicles)

2 manufacturers Skoda Auto (493,000) TPCA (104,000)

Source: Czech Automotive Industry Association (AIA)

(Weight < 6 t) 2 manufacturers

Skoda Auto (1,200) Magma (50)

7



Passenger Cars

Commercial Vehicles

Suppliers


Recommendations

References

CONTENT

8

0

200000

400000

600000

800000

1000000

1200000

2001 2002 2003 2004 2005 2010

THE PASSENGER CAR PRODUCTION IN THE CR IS EXPECTED TO DOUBLE IN 5 YEARS TIME

After the slowdown in 2003 (mainly due to economic stagnation in the EU) the passenger car production has been steadily growing in the CR

A record increase of 34% in 2005 TPCA (Toyota Peugeot Citroen Automobile)

started production in their new plant last year Booming exports of Skoda Auto In May 2006 Hyundai signed a deal on the

construction of a manufacturing facility near Ostrava → expected annual output: 300 000 vehicles

Passenger Car Production in the Czech Republic

Vehicles

*

*) Estimated production figure

Development the last 5 years

Source: Press, HN, Automotive Industry Association

9Source: Skoda Auto, TPCA

Manufacturer Employees

Business Purchase decisions

Skoda Auto 26.700 Passenger cars HQ, Mlada Boleslav, Czech Republic (By German management)

TPCA 3.000 Passenger cars Kolín, Czech Republic (Joint venture)

PURCHASE DECISIONS ARE MADE IN THE CZECH REPUBLICPa

ssen

ger C

ars

10

THERE ARE 4 CAR MANUFACTURING PLANTS IN THE CZECH REPUBLIC- TPCA plans to reach a production level of 320,000 cars annually

Hyundai Nosovice Estimated 2009 300.000 / year

Source: Skoda Auto, TPCA, Czechinvest, Hospodarske noviny (HN)

Vrchlabí

Kolín

The TPCA plant is the most modern Toyota plant in the world

Prague

Mlada BoleslavKvasiny

Manufacturer Plant Models and focus

Production volume

Skoda Auto Mladá Boleslav

Vrchlabí

Kvasiny

Octavia Fabia

Octavia

Skoda Superb

136.000 / year226.000 / year

59.000 / year

20.000 / year

TPCA Kolín Peugeot 107Citroën C1

Toyota Ayygo

35.000 / year35.000 / year35.000 / year

Nosovice

11Source: CzechInvest, European Commision, AIA, Press

Arrival of new foreign investors Lower production costs, skilled and inexpensive labor force Proximity to West European markets

International expansion of Skoda Auto New production plants in Russia and China Rapid growth in exports

R&DR&D

Competition and prices

Competition and prices

GlobalizationGlobalization

Fierce competition on the Czech market Falling sales of Skoda in the CR; Booming imports of second-hand cars; Increasing

share of (high-end) foreign vehicles Price reductions: 12,5% decline between 1996 and 2004*

Solid automotive industry and related institutions offer an attractive R&D area 9 automotive-related university faculties R&D ranges from dynamic systems to chemical technology Skoda Auto, Porsche, and Toyota have R&D activities in the CR

THE CR IS BECOMING A FAVORITE LOCATION FOR FOREIGN OEMS- Hyundai plans to invest € 1,3 bn in a new production plant

Trends within the Czech passenger car industry

*) EU- average

12



Passenger Cars

Commercial Vehicles

Suppliers


Recommendations

References

CONTENT

13

HEAVY TRUCK PRODUCTION IS DECREASING DUE TO FINANCIAL DIFFICULTIES

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2001 2002 2003 2004 2005

Light Trucks Heavy Trucks Buses

Commercial Vehicle Production in the Czech Republic Development the last 5 years

Vehicles Buses Strong production growth fuelled by stricter

emission norms (Norm Euro 4: valid from 2006-10-01) and ageing fleet of transport companies

Karosa became the largest bus factory within Irisbus Group

Trucks Falling production of heavy trucks due to bad

management and financial problems of foreign owners (Daewoo → Avia and Terex → Tatra)

Bankruptcy of smaller Czech truck manufacturers Liaz and Praga

Small producers switched to the provision of repair services

Skoda Auto reduced light truck production in order to focus on passenger cars

Source: AIA, HN, Ekonom

14Source: Ekobus, Magma, Skoda-Auto, Tatra, Avia, Schwarzmuller,

Panav, Metaco, Karosa, SOR Libchavy:

Manufacturer Employees Business Purchase decisions

Tatra 2.200 Heavy trucks Koprivnice, CR

Avia 800 Heavy trucks Prague, CR

Skoda Auto 26.700 Light trucks Mlada Boleslav, CR

Magma Alficar 60 Light trucks Brno, CR

Karosa 1.600 Busses Vysoke Myto, CR

Ekobus 200 Busses Prague, CR

SOR Libchavy 400 Busses Libchavy, CR

Schwarzmuller 100 Trailers and semi trailers Zebrak, CR, Haibach bei Scharding, Austria

Panav 400 Trailers and semi trailers Senice na Hane, CR

Metaco 40 Trailers and semi trailers Brandys n.L.,CR

THE MAJORITY OF THE PURCHASE DECISIONS ARE MADE IN THE CZECH REPUBLIC

Com

mer

cial

veh

icle

s

15

THE COMMERCIAL VEHICLE INDUSTRY IS SPREAD OUT OVER THE CZECH REPUBLIC

Source: Ekobus, Magma, Skoda-Auto, Tatra, Avia, Schwarzmuller, Panav, Metaco, Karosa, SOR Libchavy

Manufacturer Plant Models and focus Production volume

Magma Alficar Brno Light trucks 50 / year

Skoda Mladá Boleslav Light trucks 1.200 / year

Tatra Koprivnice Heavy trucks Off and on-road vehiclesSpecial vehicles TractorsTippers

1.500 / year

Avia Prague Heavy trucksTractorsTippers

600 / year

Schwarzmuller Zebrak Trailers and semi trailers

1.400 / year

Panav Senice na Hane Platform trailersTipping trailersSemi trailers

900 / year

Metaco Brandys n.L Platform trailersContainer trailersTipping semi trailers, etc.

200 / year

Karosa Vysoke Myto City busesIntercity busesTouring coachesMinibuses

1.900 / year

Ekobus Česká Lípa Ecological buses 50 / year

SOR Libchavy Libchavy City busesIntercity busesTourist coaches

250 / year

Česká Lípa

Koprivnice

Prague

Vysoke Myto

LibchavyBrandys n.L

Brno

Senice na Hane

Zebrak

Mlada Boleslav

16Source: AIA, HN, Ekonom

Ownership changes in largest truck manufacturers Acquisition of Avia by the Indian company Ashok Leyland (60% of shares) Sale of Tatra to a group of American and Czech investors Liaz bought by a Czech businessmen and renamed Fax

Success factors

Success factors

DomesticproductionDomestic

production

RestructuringRestructuring

Continuing boom in the bus production Expected recovery of heavy truck production with the entry of new investors Stagnation in the light truck sector

Flexibility and innovations launch of new models complying with the EU (environmental) directives and meeting

specific customer demands (e.g. wider buses in Scandinavia) Price competitiveness

low production costs combined with advanced technical expertise and know how

THE COMMERCIAL VEHICLE INDUSTRY HAS BRIGHT PROSPECTS- thanks to booming bus production and restructuring in the heavy truck sector

Trends within the Czech commercial vehicle industry

17



Passenger Cars

Commercial Vehicles

Suppliers


Recommendations

References

CONTENT

18

THERE ARE ABOUT 420 AUTOMOTIVE SUPPLIERS IN THE C.R.

There are about 420 suppliers for the automotive industry in the Czech Republic

Many large international players such as Barum Continental, Autopal Visteon, Automotive Lighting are present in the CR

There is a very high concentration of automotive suppliers in the central and southern part of country

Most companies have foreign capital

Traditional strong segments are Engine components, Seats, Interior parts and Plastic Components

Low High

Geographical concentration of automotive suppliersCzech automotive suppliers

Prague

Ostrava

Brno

19

THERE ARE MORE THAN 180 T1 SUPPLIERS IN THE CR- Barum Continental is the largest tire producer in the world

Source: Czech Automotive Industry Association, Kompass, Czech Invest, Ekonom 23/2006,HN

Cables, sensors, semi conductors, control units etc.

Alcoa Fujikura Czech Kostal TRW Autoelektronika KES Marbo CZ

Power train, exhaust

systems, engines Bosch Diesel Monroe Czechia Robert Bosch Motorpal Magneton Metal Ustí n./L Faurecia Exhaust

Systems

Cockpit, seats, dash-

board, air conditioning Autopal/ Visteon Siemens VDO Valeo Denso Behr Czech TRW Carr

T1 SUPPLIERST1 SUPPLIERS

Electrical systemsElectrical systems Interior equipmentInterior equipment PropulsionPropulsion BodyBody Running gearRunning gear

Body, roof, glass, doors, lighting etc.

Automotive Lighting Peguform Bohemia Dura Automotive AGC Automotive Cz Benteler ČR Hella

Suspension, brakes, axles, steering, tires

Barum Continental Brano Group Continental Teves Mubea Lucas Varity TRW Volant

Automotive Lighting will invest more than 600 M SEK in new production facilities

20

ALMOST ALL PURCHASE DECISIONS ARE MADE ABROADManufacturer Employees Business Purchase decisions

Bosch Diesel 5 300 High pressure pumps and compressor units

Czech Republic / Germany

Autopal/Visteon 4 500 Air conditioning, condensors and lighting

Decisions made worldwide :England, USA

Barum Continental 4 200 Tyres Germany, Hannover

Brano 2 400 Suspensions, shock absorbers and braking systems

Czech Republic

Siemens VDO Automotive

2 400 Electronic units and dashboard units

N/A

Motorpal 2 000 Engine and components By board in Czech Republic or by the customers

Robert Bosch 2 000 Tank modules, suction systems, electronic gas pedals and car brakes

N/A

Peguform Bohemia 1 900 Auto glass, dashboard units and plastic components

USA

Alcoa Fujikura Czech 1 700 Vehicle electronics N/A

Automotive Lighting 1 700 Lighting Individually : Germany, Czech Republic

T1 S

uppl

iers

Source: Czech Automotive Industry Association, Kompass, Czech Invest

21

T1 SUPPLIERS, CONTINUEDManufacturer Employees Business Purchase decisions

Kostal 1 500 Electronic parts and dashboard units

Czech Republic

Continental Teves 1 400 Car brakes Germany

Dura Automotive 1 400 Chassis components Plettenberg, Germany

Valeo 1 100 Air conditioning and condensors

Rakovnik, Czech Republic

Denso Manufacturing 1 200 Air conditioning and condensors

90% Czech Republic

Magneton 1 000 Engine and components N/A

Lucas Varity 900 Brake systems Germany

Hella Autotechnik 800 Lighting systems N/A

AGC Automotive 800 Vehicle glazing Belgium / Czech Republic

Metal Ustí n.L 700 Engine and components Germany

Behr Czech 600 Air conditioning and condensors

Germany, Stuttgart, CR

TRW Autoelektronika 500 Electronic parts Germany

TRW Volant 500 Dashboards, steerage and foot pedals

Germany

T1 S

uppl

iers

22

THE T1 SUPPLIERS ARE CONCENTRATED IN CENTRAL BOHEMIA - close to the large OEMs


Jicin

Blatná

Trmice

Rakovník

Zdice

Benesov

Vratimov

Velké Meziříčí

Nový Jičín

Stará Boleslav

Liberec

Mnichovo Hradiště

Jihlava

Bakov nad JizerouBílina-Chudeřice

Stráž nad Nisou

OtrokoviceZebrak

Hradec nad Moravicí

Novy Jicin

Mohelnice

Hodkovice

Jihlava

23

THERE ARE ABOUT 240 T2 SUPPLIERS LOCATED IN THE CR- Fezko is the most successful Czech-owned T2 supplier

Source: Source: Czech Automotive Industry Association, Kompass, Czech Invest, HN

Cables, bus systems, embedded systems

Witte Nejdek Kablo Elektro PEKM Kabeltechnik KES TRW Autoelektronika Kautex Textron

Power train, exhaust systems, engines

Robert Bosch Rubena a.s Motorpal CZ a.s Buzuluk Komárov Tesla Blatná

Cockpit, seats, dash-board, air conditioning

Autopal Brano Denso Gumotex Showa Alu. Cz Fezko Plastika

T2 SUPPLIERST2 SUPPLIERS

Electrical systemsElectrical systems Interior equipmentInterior equipment PropulsionPropulsion BodyBody Running gearRunning gear

Body, roof, glass, doors, lighting etc.

Tyco Electronics Hella Dura Automotive Rieter CZ Wagon Automotive BTV Plast Edscha Bohemia

Suspension, brakes, axles, steering, tires

Brano Group Robert Bosch Barum Continental Aliachem a.s Federal Mogul Kostal ZKL Klasterec

24



Autopal 4 500 Heating and air conditioning N/A

Barum Continental 4 200 Wheels, axles, wheel suspension and springing

Czech Republic, Germany

Brano Group 2 400 Seating locks Czech Republic

Rubena a.s 2 200 Steerage, foot pedals and exhaust systems

Czech Republic

Robert Bosch 2 100 Engine components and brakes Czech Republic

Tyco Electronics Czech

2 000 Lighting systems N/A

Motorpal 2 000 Fuel systems Czech Republic or the customer decides which supplier he wants

Aliachem a.s 1 800 Braking systems, seating and interior

N/A

Denso 1 800 Air conditioning and condensors

Germany, Japan, CR

Gumotex 1 700 Seats and interior parts CR

ALMOST ALL PURCHASE DECISIONS ARE MADE IN THE CR- 4 companies make some of the purchase decisions abroad

T2 S

uppl

iers


25

T2 SUPPLIERS CONTINUEDManufacturer Employees Business Purchase decisionsWitte Nejdek 1 600 Automobile locks Germany, CR

Kostal 1 500 Dashboard and centre console Czech Republic

Kostal 1 500 Centre consoles Czech Republic

CZ a.s 1 400 Exhaust emission systems, gears and drivers

Czech Republic

Dura Automotive 1 400 Door systems Manufacturing material : GermanyMaintenance : CR

Rieter 1 300 Door systems Purchase recommendations in Switzerland, final decisions CR

Kablo elektro 1 100 Vehicle electronics Czech Republic

Buzuluk Komárov 900 Engine and components Czech Republic

Federal-Mogul 900 Braking systems N/A

Hella Autotechnik 800 Lighting systems Main decisions in Germany

Advanced Plastics 800 Lighting and braking systems Germany / Czech Republic

PEKM Kabeltechnik 700 Vehicle electronics Germany / Czech Republic

T2 S

uppl

iers

26

THE T2 SUPPLIERS ARE SPREAD OUT OVER THE CZECH REPUBLIC - many of them are located in central and southern part of the country


Blatná

Liberec

Benesov

Vratimov

Nový Jičín

Klada-Krocehlavy

Nejdek

JiklavaOtrokovice

Hradec nad MoravicíNovy Jicin

Strakonice

Kroměříž

Plzeň

Komárov

Havlíčkův Brod

Ústí nad Orlicí

Dolní Skrýchov

Bělá pod Bezdězem

Kostelec nad Orlicí

Žďár nad Sázavou

Mlada Boleslov

Mohelnice

27Source: Press, Automotive Industry Assocation, CzechInvest

Expansion of production facilities of current suppliers Arrival of new foreign producers following their customers in the CR (with regard to

TPCA’s and Hyundai’s production start) Czech products are increasingly demanded by other international OEMs (Ford, GM, etc)

R&DR&D

Competition and price pressure

Competition and price pressure

GlobalizationGlobalization

Tough competition on the Czech market leads to rising exports (75% of local production) and falling prices of automotive components

Some suppliers have to deal with higher costs because of increasing prices of raw materials (tire production)

R&D is traditionally successful CR is the fourth most attractive R&D location worldwide because of the blend of an outstanding engineering tradition and high quality professionals Over 4000 R&D employees in the automotive sector Further foreign producers are expected to locate their R&D activities in the CR in the next years

THE MANUFACTURE OF AUTOMOTIVE COMPONENTS IS ONE OF THE FASTEST GROWING SECTORS OF THE CZECH INDUSTRY

Trends within the Czech auto parts industry

28




Manufacturers

Suppliers

Recommendations

References

CONTENT

29

0

200

400

600

800

1000

1200

1400

1600

2000 2001 2002 2003 2004 2005

Exports Total Production

THE CZECH PRODUCTION OF CONSTRUCTION EQUIPMENT VEHICLES TOTALS APPROXIMATELY SEK 1,2 BILLION- the industry grew more than 32 % in 2005

Mobile drillings derricks, concrete mixers

SEK 343 million

Fork-lift trucks and other work trucks

SEK 84 million

Cranes, mobile lifting frames

SEK 302 million

million SEK Production machine and construction vehicles in the Czech Republic

Re-export of imported construction equipment has a high share in total exports

Source: Czech Ministry of Trade, Czech Statistical Office

Bulldozers, graders and scrapers

SEK 482 million

30

OVER 1.700 CONSTRUCTION VEHICLES ARE PRODUCED IN THE CZECH REPUBLIC

CONSTRUCTION EQUIPMENTCONSTRUCTION EQUIPMENT

ROADROAD

2 manufacturers VOP 025 Tatra

Graders, asphalt pavers, asphalt mixers

MININGMINING

3 manufacturer Otas Ing. Vojtech

Novotny Stastr Castlav

Wheel loaders, drills, haulers

4 manufacturers Otas Ing. Vojtech

Novotny Stastr Castlav Zetor, a.s

EARTH MOVINGEARTH MOVING

Excavators, wheel loaders, backhoe loaders, Skid steer loaders, haulers

LIFTINGLIFTING

2 manufacturer CKD Mobilni

jeraby Stavební Stroje

Mobile cranes, forklifts

Source: Kompass, Seznam, Otas, Ing. Vojtech, Stastr Castlav,CKD Mobilni jeraby, VOP 025, Tatra

The production of construction vehicles is traditionally low in the Czech Republic

* Includes earth moving and underground vehicles

31

ALL PURCHASE DECISIONS ARE MADE IN THE CZECH REPUBLIC

Manufacturer Employees Models and focus Plant Production volume

Purchasing decisions

CKD Mobilni jeraby, a.s

50 Truck-mounted cranesMobile cranes

Slany 20 / year Czech Republic

Tatra a.s 4 000 Heavy duty off and on-road vehicles

Koprivnice 1.500 / year* Czech Republic

Otas, s.r.o 12 Minidiggers Pribram 50 / year Czech Republic

Ing. Vojtech Novotny

90 Compact loaders Dubicko 100 / year Czech Republic

Zetor a.s 1 100 Tractors Brno 5.750 /year Czech Republic

VOP 025 1 100 Fire fightersBandwagonsCaterpillar trucksArmy production

Novy Jicin Not available Czech Republic

Stastr Caslav, s.r.o

50 Hammer drilling rings, tractor excavators, vibratory rollers

Caslav 5 / year No purchase

Source: CKD Mobilini jeraby, VOP 025, Tatra a.s, Otas, s.r.o, Ing. Vojtech NovotnyStastr Caslav, s.r.o

* Total production including trucks

32

THE CONSTRUCTION EQUIPMENT PLANTS ARE SPREAD OUT OVER THE CZECH REPUBLIC

Source: CKD Mobilini jeraby, VOP 025, Tatra a.s, Otas, s.r.o, Ing. Vojtech NovotnyStastr Caslav, s.r.o

Stany

Koprinice Pribram

Dubicko

Novy Jicin

Caslav

Brno

Prague

Usti nad Labem

33




Manufacturers

Suppliers

Recommendations

References

CONTENT

34

THERE ARE ONLY A FEW SUPPLIERS IN THE CZECH REPUBLIC - many of them produce components also for other industrial segments

Source: Kostal, Behr Czech, TRW Carr, KES, Barum Continental, Tedom, THT, AXL, Metal Ustí n./L

Cables, sensors, semi conductors, control units

Kostal KES Kautex Textron TRW Carr

Undercarriage and body

CTS Servis Edscha Bohemia

Power train, engines, exhaust systems, axles

Tedom Metal Ustí n./L Buzuluk Komarov

SUPPLIERSSUPPLIERS

Electrical systemsElectrical systems Propulsion and running gear

Propulsion and running gear Steel constructionSteel construction HydraulicsHydraulics AccessoriesAccessories

All kinds of hydraulic cylinders

AXL

All kinds of accessories

Kostal Barum Continental Behr Czech Kautex Textron THT

35



Kostal 1 800 Electronic parts and dashboard units

CR

Barum Continental

4 200 Tires Germany, CR

TRW Carr 1 200 Lighting, fasteners and safety belts

CR and at German head office

Buzuluk Komarov

900 Engine components CR

Metal Ustí n./L 750 Engine components Germany

Behr Czech 600 Air conditioning and condensors

Germany

Edscha Bohemia

300 Door systems Germany

Kautex Textron 300 Plastic components CR and abroad

KES 300 Electronic parts and dashboard units

NA

PURCHASE DECISIONS ARE MADE BOTH IN THE CR AND ABROAD

Source: Kostal, Behr Czech, TRW Carr, KES, Barum Continental, Buzuluk Komarov, Metal Usti, Edscha Bohemia, Kautex Textron

36

CONSTRUCTION EQUIPMENT SUPPLIERS

Source: Kostal, Behr Czech, TRW Carr, KES, Barum Continental, Tedom, THT, AXL

Praha

Semily

Nymburk

Polička

Třebíč

Vratimov

Vratimov

OtrokoviceDolní Skrýchov

Komárov

Benesov

Mlada BoleslovMnichovo Hradiště

Zdice

37Source:HN, Ekonom, Companies websites

Low share of construction vehicles in the automotive industry Stagnating production in local OEMs Zetor is an exception: the tractor manufacturer plans to double production in the next years

Growth in the component segment is driven mainly by supplies to passenger car manufacturers both in the CR and abroad

R&DR&D

CompetitionCompetition

Domestic productionDomestic

production

Dominant position of imported brands (Liebherr, Man, Scania) Irrelevant market share of Czech OEMs Increasing competition among local suppliers whose products are designed for both transport and construction

vehicles

Limited R&D activities in connection with construction vehicles Only Zetor shows significant innovation potential among local OEMs Suppliers are more active but their main focus are passenger cars

THE COMPONENT SECTOR IS EXPECTED TO GROW- but the production of construction vehicles is likely to stagnate

Trends within the Czech construction vehicle industry

38




Recommendations

References

CONTENT

39Source: STC

RECOMMENDATIONS FOR DOING BUSINESS IN THE CZECH AUTOMOTIVE INDUSTRY

Recommendations for doing business in the Czech automotive industry

Consider geographical aspects when selecting business partners to keep your options open to deliver to the German market

3.3.

2.2.

1.1.

T

Although the price-level is competitive, choose Czech Republic mainly for quality and a high number of highly qualified engineers

Involve engineers in the expansion planning and partner negotiation since your local partner will ask many technical questions

Country specific

Make your move now since the Automotive industry is growing faster than ever with substantial investments from OEMs and tier1 suppliers

3.3.

2.2.

1.1.

Establish your own subsidiary with local management to develop channels to the local business network

Use the Czech Republic as a central hub to expand into the rest of Central and Eastern Europe

Industry specific

40




Recommendations

References

CONTENT

41

HOW CAN STC SUPPORT COMPANIES TO DO BUSINESS IN THE CZECH REPUBLIC?

Specific market analysis including both macro and micro level according to customer specification

Company AquisitionCompany Aquisition

Distributor/ suppliersearch

Distributor/ suppliersearch

Market CheckMarket Check

Country specific

BSOBSO

RecruitmentRecruitment

Company establishment

Company establishment

LegalLegal

Business Support Office. You company can use the premises/address of the STC and use tailor made administration and market support services.

Direct or Indirect search for high or mid level managment including the whole process of head hunting, advertisement, candidate screening, actual interviews and potential candidate evaluation

Practical knowledge and functional support during company registration

Due dilligence – financial, tax and legal support including strategical advise on what’s best for You

Market screening and evaluation of suitable distributors or suppliers according to specific criteria including visiting programmes to the potential partners

Organization and planning of the project – Potential target seach and analysis - Evaluation of the targeted company – Negotiation support - Due Diligence – Closing of the deal – Execution of the aquisition

42

STC HAS HELPED NUMEROUS SWEDISH COMPANIES TO DO BUSINESS IN THE CZECH AUTOMOTIVE INDUSTRY

COMPANY PROFILE

Designs and manufactures air filters and filtration equipment for a wide range of markets and applications- from commercial and industrial buildings to manufacturing cleanrooms- from diesel powered vehicles to specialized OEM equipment

World leader in dust and smoke extraction, exhaust fume extraction, hose and cable reels, workplace partitioning and protective gear.

Lamination and preparation of textile products for the automotive industry

43

STC CARRIED OUT A MARKET ANALYSIS, PARTNER SEARCH AND A CUSTOMER AQUISITION FOR TIDBECKS

The main objective of the project was to support Tidbecks’ competitive position through widening of the assortment and establishing low-cost-country production in the Czech Republic.

STC role and contributionSTC role and contribution

ResultsResults

GoalGoal

• Market analysis for welded and woven wire products• Potential target search and analysis• In-depth customer acquisition analysis including evaluation

and due dilligence support• Organization and planning of the aquisition process• Closing of the aquisition – in current negotiation

• Tidbecks will have local precence and cost efficient production and thus increase their competitivness

Step1: Project plan Step1: Project plan

Step 2: Market analysis Step 2: Market analysis

Outline of projectOutline of project

Kick-Off

Workshop I

Completed

Step 3: Aquisition target screening and analysis

Step 3: Aquisition target screening and analysis

Step 4:EvaluationStep 4:Evaluation

Step 5: Due DiligenceStep 5: Due Diligence

Step 6: Closing/executionprocess

Step 6: Closing/executionprocess

Completed

Workshop 2

Workshop 3

Completed

Completed

Completed

Final negotiations

Workshop 4

44

STC CARRIED OUT A COMPETITOR AND CUSTOMER ANALYSIS AND COMPLETE SCREENING AND EVALUATION OF POTENTIAL PARTNERS

The overall objective is to increase Nederman’s sales in central Europe through local presence

• Identification and analysis of relevant competition• Detailed analysis of customers’ preferences• Find, screen and evaluate potential partners• Recommendation of market entry strategy

STC role and contributionSTC role and contribution

ResultsResults

GoalGoal Outline of projectOutline of project

• Received a “form fitted” strategy and partner match-making which has resulted in local presence

Extensive industry interviews and desk

research

Partner search, visits and evaluation

Market analysis

Partner search

Recommendations

Recommen-dations / partner

negotiations

automotive fact pack

Documents

czech republic vehicles

ministry of industry

industry worker

czech republic growth

automotive industry

czech ministry of trade

czech statistical office

year production vehicles