Slovak automotive industry in danger

Adapt Institute

The automotive industry, especially in Slovakia, is a key driver of economic growth, with factors such as the legacy of engineering production, skilled workforce, and a strategic geographic location contributing to its success. Thanks to dominant players like Volkswagen, Stellantis, Kia, Jaguar Land Rover, and Volvo, Slovakia has become the world’s largest per capita producer of automobiles.

However, the automotive industry in Slovakia faces significant risks, including the fragility of global supply chains (exemplified by the COVID-19 pandemic and Russia’s war in Ukraine), the green transition mandated by the European Union’s (EU’s) ban on internal-combustion engines after 2035, subsidy competition from the United States and China, and intense global competition, especially from China, which has become the world’s largest auto exporter.

In order to assess the challenges and opportunities facing the Slovak automotive industry, our analysts conducted interviews with key stakeholders, including representatives of original equipment manufacturers (OEMs), suppliers, government experts, and financiers. Through these interviews and further analytical work, our report was prepared, revealing that the Slovak automotive industry is undergoing a multidimensional transformation with stakeholders recognizing and preparing for risks to varying degrees.

The transformation of the automotive industry in Slovakia also faces challenges, with progress hindered by persistent questions of political continuity and the implementation of crucial improvements. The approval of the Action Plan for the Development of Electromobility by the government in 2023 signals a positive step, but concerns about the effective implementation of strategies persist. Shortages of qualified workers, regional disparities in unemployment, and declining education levels pose additional obstacles.

Dependence on foreign workers, especially from non-European countries, is increasing, emphasizing the need for a comprehensive migration policy to attract and retain skilled workers. Insufficient electric mobility infrastructure, along with high and volatile energy prices, presents further risks for this industry. The government’s role in securing private investments for infrastructure development and stabilizing energy prices is crucial.

There’s more to the topic that meets the eye. Therefore, we invite you to check our newest report we prepared with coordination and support from the Center for International Private Enterprise (CIPE), whose mission is to strengthen democracy around the globe through private enterprise and market-oriented reform.

For more information on the challenges and risks for automotive industry operating in Slovakia and the European Union, you can refer to:

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