ALL of the three main carmakers in Slovakia have been affected by the global economic crisis and its impact on their customers’ choice of vehicles and ability to pay for them. But in spite of this the big firms are maintaining an upbeat position when it comes to new models, production increases and the recruitment of new employees.
It is doubtful whether Volkswagen Slovakia in Bratislava, PSA Peugeot Citroën Slovakia in Trnava and Kia Motors Slovakia in TepliÄŤka nad Váhom (near Ĺ˝ilina) will exceed last year’s aggregate production of 575,776 units, but production of newly launched models as well as those being planned promises better results in the future.
“The financial crisis visibly changed the behaviour of customers, who are now more oriented towards small cars with low fuel consumption and low emissions,” Peter Švec, the spokesperson of Trnava-based PSA Peugeot Citroën Slovakia told The Slovak Spectator. “The production centre of PSA in Trnava, which is oriented towards production of cars in this segment, is benefiting from this change in customer behaviour.”
In spite of this, PSA did not escape the impact of the crisis at the end of 2008, when the steep fall in demand for cars – especially bigger models – forced car companies to transfer production between plants.
“At that time the Trnava plant produced only one model, the Peugeot 207, which is also produced in Poissy near Paris and also in Madrid,” said Švec.
Later, the gas supply crisis in January 2009 forced the Trnava plant to halt production for seven working days and complicated preparations for the launch of full-scale production of a new model, the Citroën C3 Picasso, a project which involved investment of about €100 million. In the end, the plant met its targets and launched production of the new model even earlier than planned, according to Švec.
“Since Trnava is the only production centre manufacturing this model, its sales success has been reflected in maximum usage of our production capacities in two shifts,” said Švec. “[We are] the only car producer in Slovakia which has not had to halt production or cut working hours because of reduced demand since January. On the contrary, from the start of the year we have introduced two working Saturdays every month, on average. From June we even extended the afternoon shift by one hour.”
Now the Trnava plant produces more than 900 cars per day, of which about 43 percent are Citroën C3 Picasso models. The plan of the plant, which employs around 3,000 workers, is to increase production from last year’s figure of 186,000 vehicles to about 200,000 in 2009.
The situation in the remaining two carmakers in Slovakia has been somewhat different. Kia Motors Slovakia, the most recent carmaker to arrive in Slovakia and the South Korean’s manufacturer’s only plant in Europe, shortened its shifts earlier this year to maintain employment. And Volkswagen Slovakia has halted production several times to adjust its output to demand, using various tools to keep its employees in jobs. This was mainly because, unlike the PSA Peugeot Citroën Slovakia and Kia Motors Slovakia plant, the VW plant, near Bratislava, produces larger and more expensive models which have not qualified for the car-scrapping bonuses.
“The introduction of the car-scrapping bonus has left production of cars in VW Bratislava unaffected because this bonus is generally designed for lower- to middle-category cars,” Vladimír Machalík, Volkswagen Slovakia’s spokesperson told The Slovak Spectator. “We have seen its positive influence on demand for models in this category. But we have also registered a positive effect from the bonus on our production of gearboxes and components.”
Kia Motors Slovakia has already resumed full two-shift operation in July, according to the SITA newswire.
“Now Kia Motors Slovakia employs 2,700 people in two shifts,” Dušan DvoĹ™ák, the company spokesperson told The Slovak Spectator. “Daily production is around 800 units. But it is very difficult to estimate the next development in the car industry. The situation in European markets has certainly not stabilised and it is impossible to forecast customer behaviour up to the end of 2009 or for 2010. We manufacture cars to order, so production is very sensitive to changes in customer behaviour.”
Kia Motors Slovakia has just launched production of a new version of the Kia cee’d model, for which it expects increased demand from customers.
“At the beginning of 2010 we plan to launch production of a third model, which should help us to increase the production at our plant,” said DvoĹ™ák. “With the launch of the Kia Venga by our sister company, Hyundai, in the Czech Republic, we expect higher demand for the engines we produce for that plant.”
Kia Motors Slovakia is now recruiting new workers for a third shift in the engine manufacturing plant. This is intended to satisfy higher demand for engines for the new Kia Venga model as well as for the third model to be made in Slovakia, the Hyundai ix35, which will start production in early 2010.
Along with Kia, Volkswagen Slovakia is also preparing for production of a new model.
In April, VW Group picked the Bratislava plant as the production site for its New Small Family line of cars. The decision should result in an investment of €308 million and an increase in the company’s labour force by 1,500 people.
VW Slovakia has already started preparing for the new production line, which will increase the annual capacity of the Bratislava plant to 400,000 units. As part of the project, new Volkswagen, Škoda and Seat models will be added to the Volkswagen Touareg, Audi Q7 and Škoda Octavia vehicles, and Porsche Cayenne bodyshells, currently manufactured there.
Last year, the Bratislava plant produced 188,000 units and employed 7,800 people on average, according to SITA.
Environmentally friendly cars
Carmakers are currently having to respond to growing demand – both from consumers and governments – for more environmentaly friendly cars.
“PSA is the leader in Europe in production of ecological cars,” said Švec. “Our exclusive orientation towards ecological vehicles started as early as 20 years ago and it turned out that we invested in the right direction.”
The remaining two carmakers in Slovakia are also responding to demand.
“The completely renewed range of Kia cee’d cars offers our clients technical innovations which significantly reduce fuel consumption and CO2 emissions,” said DvoĹ™ák.
Volkswagen says it is continuing to innovate.
“For example, the Audi Q7 3.0 TDI of the new generation burns only 9.1 litres of fuel for each 100 kilometres travelled,” said Machalík of Volkswagen Slovakia. “We produce it also in the new TDI clean diesel version, which is the cleanest diesel technology worldwide and has an even lower fuel consumption: 8.9 litres per 100 km.”
Challenges of the automotive industry
According to Machalík, the situation in the car industry depends on how demand evolves, because the automotive industry in Slovakia is export-oriented and thus demand in the biggest markets has a significant influence on it.
Volkswagen Slovakia also lists among other challenges maintaining a qualified labour force, boosting labour productivity and continuing infrastructure development in Slovakia, according to Machalík.
PSA Peugeot Citroën Slovakia regards keeping its suppliers in business as the current biggest challenge in the car manufacturing sector.
“Their ability to respond to large swings in demand during the crisis has been shown to be the weakest point of the car industry,” said Švec.
