Bulgaria`s automotive components market

Nine out of ten automobiles in Europe contain parts that were manufactured in Bulgaria. 80% of all the sensors in European cars were also produced in the country, InvestBulgaria Agency (IBA) reports. The automotive parts manufacturing is one of the fastest developing sectors in Bulgaria today, growing by around 8% per annum. There are more than 270 companies in the industry, many of which producing components for automotive applications, employing over 80 000 people, and a great number of foreign brands who own production bases in the country and are planning or already constructing their second or third manufacturing facility in Bulgaria.

Sector development and trends

According to the latest data of the National Statistical Institute (NSI), the export of machinery, equipment and vehicles for 2021 and 2022 is over BGN 15 and 19 million, respectively, and the annual rise is more than 22%. Another report by the local investment agency says that the automotive components market contributes for around 11% of the country’s gross domestic product, which in 2023 amounts to over EUR 10 billion. The annual turnover of the industry is over EUR 4,3 billion. The vigorous production business in Bulgaria is supported by strong research and development activities, as there are almost 30 R&D centers across the country.

The auto parts and accessories production sector rapidly developed in the period from 2000 to 2015 when many foreign investors entered the Bulgarian market, building export-oriented factories for automotive components, supplying major global manufacturers, including Volkswagen, KIA, Hyundai, Renault, BMW, Mercedes-Benz, Fiat, Ford, Audi and Volvo.

Today this list is supplemented by even more world renowned car makers, among which are Mini Cooper, Porsche, Bentley, Lamborghini, Ford, Nissan, Seat, Alfa Romeo, Mitsubishi, Skoda, Tesla, etc.

From a geographical perspective, Sofia has become the main hub of the software sector, supporting the automotive industry, and a significant part of the production activities are concentrated in Plovdiv, Automotive Cluster Bulgaria (ACB) reports. In recent years though, other areas have also been clearly positioned on the map of the automotive industry, such as Stara Zagora, Burgas, Ruse, Pleven, Botevgrad, Vratsa, etc.

According to arch. Lyubomir Stanislavov, CEO of ACB, the trends determining the growth of the sector, and the market growth of companies are related to technological modernization and intelligent production. In the conditions of the dynamically changing socio-economic environment, automation and the implementation of modern robotic technologies by enterprises are a major factor for optimizing and increasing the efficiency of their production processes, the expert adds.

Overview of companies and main components produced

A comprehensive report on the innovations and challenges in the automotive industry in Bulgaria, published by ACB in 2022, informs that companies which are part of the automotive sector in the country are mostly Tier 1, 2 and 3 suppliers, whose activities are not solely tied to this industry. The study examines two main types of enterprises – those whose main subject of activity is related only to the automotive industry and companies producing for other industries, including automotive.

Among the major manufacturers in the country, producing automotive components, parts and accessories, are Integrated Micro-Electronics, Festo, Melexis, Sensata, BHTC, Linamar Light Metals Ruse/Montupet, Great Wall, Kostal, Johnson Controls, Ixetic, SE Bordnetze, Oskar Ruegg, Yazaki, Witte Automotive, Wurth Elektronik, etc. In the recent years there were also many large investments in the sector – announced or already launched by local or foreign companies, among which are Nidec, Odelo, Kostal, Avesta, Nedschroef, Gebauer & Griller, Technical Components Bulgaria, Sienit Holding, Kaiser Automotive, Shanghai Unison Aluminum Products, etc.

According to official data, the main groups of components, manufactured in the country, include: upholstery, seats, cables, parts for air conditioners and motors, microchips, rubber seals, glass, springs, electronics, aluminum profiles, belts, and so on. Represented in the product mix of companies engaged in manufacturing activities are also: bearings, fuel, air and oil filters, batteries, gears, alternators, starters, pistons, piston rings and bolts, blinker and wiper arms, steering wheel modules, sealing systems, gas injection systems and modules, alarm systems, electrical installations, airbag sensors, and more, ACB further informs. “Over 90% of airbag sensors in European cars are produced in Bulgaria – a distinctive example of successful development and enforcement of specific production, which is part of the automotive industry”, the Cluster’s report also says.

Innovation strategies and priorities for the further development of the sector

The cited “Automotive Cluster Bulgaria – innovations and challenges” report also sets major priority directions within the innovation strategy for the sector. Among them are: production of basic elements, details, units and equipment; mechanical engineering and equipment engineering, including parts, components and systems; engineering, reengineering and life cycle extension of industrial machines, appliances and systems; systems for automated and software-assisted management with application in production; embedding robotic systems with AI in production; design and production of high-tech products; implementation of clean technologies with an emphasis on transport, energy, electric vehicles and eco-mobility.

Some of the main challenges which the Bulgarian automotive components market is currently facing in the context of future mobility, according to ACB, are related to autonomous driving, ad-hoc support for large Tier 1 suppliers, introducing incentives for production, distribution and use of electric vehicles. The Cluster’s experts suggest the creation of incubation programs that stimulate more Bulgarian companies to enter the system of automotive suppliers, as well as establishing a center of national significance for software development in the field of connectivity and autonomous driving. In this regard an important priority is the creation and management of the first experimental 5G laboratory on the territory of the country to work in synergy with the supercomputer in Sofia Tech Park, ACB also points out.

The Bulgarian automotive components market development also requires targeted initiatives related to advertising, finding and creating qualified personnel for the automotive industry, experts add. That would call for support of the higher technical schools in the country with mechatronics profiles, a strong partnership with the Ministry of Education with the aim of accelerated development of the dual education program in Bulgaria, as well as the implementation of regional competence centers, the sector innovation strategy also underlines.

Major current investments "steering" the automotive market

In the last 5 years in Bulgaria a number of large-scale investments by local and foreign companies in production facilities supplying the automotive component market in the country, Europe and the whole world were announced or launched.

In 2019 Kostal Bulgaria Automotive, a division of the German automotive component manufacturer Kostal, opened a new production complex on an area of 13 000 square meters at its plant in Pazardzhik. The plant produces about 250 000 steering wheels for Volkswagen models and about 100 000 pieces for BMW models. With the expansion of the production the company hired 1000 new workers.

In August 2022 the manufacturer of car lights Odelo Bulgaria, part of the Turkish Bayraktarlar Holding, opened its second factory near Plovdiv. After the company started mass production for Mercedes and other major car companies in 2019, a spare parts plant has also been in operation since 2022.
The past year turned out to be extremely important for the development of the local automotive parts market. In July 2023 the Dutch company Nedschroef opened a new plant for high-tech components for the automotive industry in the industrial zone of Stara Zagora. The investment exceeds BGN 50 million and creates 300 new jobs. The new production facility is located on an area of nearly 30 000 square meters.

Also in the summer of 2023 the Vienna-based Gebauer & Griller Group announced its plans to invest nearly BGN 60 million in the construction of a new production facility in Ruse for components with a focus on automotive and industrial applications. The Austrian company will operate as a supplier to the Bavarian automotive industry, with the new plant expected to provide around 400 new jobs. The new facility will focus on the production of electric vehicle products, including HV wiring harnesses for well-known European car manufacturers.

In September 2023 Technical Components Bulgaria announced a large-scale investment project for extension of its plant with production and warehouse parts, worth more than BGN 14 million and creating more than 330 new jobs. The company is a subsidiary of the German EbV Elektronikbau und Vertirebs. The production is entirely for export, namely components and systems for energy efficient heating and air conditioning, and offers development activity and serial production of a variety of products with application in various devices in the automotive and other industries.

In October 2023 the Ministry of Innovation and Growth presented a Class A certificate for investment in research and development activities to Nidec Elesis R&D Europe Bulgaria. The project amounts to more than BGN 4,8 million, and a total of 70 new jobs are expected to be created. The facility will be active in the development of innovative electronic traction inverters, on-board and outboard chargers, converters and all motor drive applications. The investment project has the potential to turn Nidec’s European team into one of the top 3 suppliers of electronic propulsion systems. The components produced as a result of this activity will be sold not only in Europe, but throughout the world.

At the end of the year, Belgium’s Avesta Battery & Energy Engineering (ABEE) revealed its intentions to build a new generation of solid-state lithium-ion battery production facilities for the automotive sector in Bulgaria, with an expenditure of EUR 1,1 billion. Three distinct locations are to be set to create the project: a production facility in Stara Zagora, an R&D center in Plovdiv, and a used battery recycling plant in Burgas, which will also supply raw materials.

In January 2024, Sienit Holding also announced its plans to build a new plant for the production of aluminium parts, car parts and accessories – in the village of Radinovo, Plovdiv region. The factory will be built on an area of 13 000 square meters. In the production facility aluminium profiles with wide application in the automotive industry will be developed and manufactured.

A month later BPD (Bulgarian Property Developments) disclosed that it has attracted a new German investor in the BPD Pleven Logistics Project, which the company is developing.

Kaiser Automotive plans to start the production of automotive components – pipe systems, valves, tanks and others, in Pleven this year on an area of more than 5200 square meters, with the possibility of expansion within the project by another 5000 square meters. The new investor will develop its activities in the BPD Pleven Logistics Park for an initial period of 10 years.

In March 2024 the Chinese company Shanghai Unison Aluminum Products announced that it intends to build its own factory for auto parts with an investment of EUR 35 million in the Trakia Economic Zone near Plovdiv. The factory in the village of Radinovo will produce aluminium components (bumpers, frames, dashboard parts, battery housings for electric vehicles) for several companies, including Tesla and Volvo, as well as some of the brands in the Stellantis Group, including Fiat. It is planned that 200 people will work in the plant near Plovdiv, and if the development is successful in the future, it may be expanded, the company also disclosed. Shanghai Unison Aluminum Products has plants in China and Mexico, and now will be exporting production to Europe for the first time.