Serbia’s automotive sector

MachinesTechnical ArticlesSouth-East European INDUSTRIAL Мarket - issue 3/2023 • 11.09.2023

Due to its highly skilled workforce and location, the automotive industry in Serbia is not just a traditional economic sector but also an industry with a promising future. According to recent data by Deloitte, almost all significant European and some Asian automakers receive supplies from the Serbian automotive sector. The production of engine components (valves, brake discs, camshafts, flywheels, etc.) are the sector’s most significant activities. The main products in the electrical system component category are automotive batteries and wiring harnesses and systems. Along with forged and machined elements, the manufacture of engine parts, the majority of which are cast, is also quite key for the country. Major product groups in the Serbian automotive industry also are: tires, wipers, hoses and various metal components. There are also significant future prospects for the production of turbochargers, radar and optical sensors, electronics and power converters as well.


A substantial amount of foreign capital and investors were drawn to the manufacturing and entire supply chain of the automotive industry by the experience and the knowledge in the sector. Over 60 foreign investors have contributed with more than EUR 1,7 billion to the industry, supporting the creation of more than 27 000 jobs, according to the Chamber of commerce and industry of Serbia.

Among the leading foreign investors in automotive industry are from Italy (Fiat, Proma-MA, Magneti Marelli, Sigit), France (Michelin, Le Belier), Germany (Robert Bosch, Leoni, Draxlmaier), the United States, (Cooper, Johnson Controls), South Korea (Yura) and other countries.

The Fiat project is the biggest and most significant investment in the automotive industry, not only due to the substantial investment value but also because it assisted in luring other auto component manufacturers to Serbia. Over 100 000 500L vehicles are produced annually by FCA (Fiat Chrysler Automobile), with the bulk going to the US and EU markets, the Development Agency of Serbia (RAS) reports. The Agency also points out that Serbia has been a top European location for foreign investments in the automotive sector over the past 10 years.


Development of the sector

When military vehicle assembly began in the City of Kragujevac, which is now the center of Serbia’s automotive industry, in 1939, Serbia’s automotive industry began its development and growth. Since then, the modest Kragujevac facility has been converted into the Serbian auto industry’s behemoth known as Zastava by obtaining the Fiat license. Zastava would go on to build more than 4,5 million vehicles over the course of the following 55 years, 650 000 of which were intended for export.
In 2008, Fiat acquired the sluggish Zastava factory with an unprecedented investment project valued at EUR 940 million. The plant had a comprehensive makeover and new equipment was added to start producing the brand-new Fiat 500L small MPV.

Fiat is considered the cornerstone of the automotive sector also because it is now the only manufacturer of passenger cars in Serbia.
It took some time for major investors to start looking at the country as a potential location because Serbia entered the international investment scene late, RAS points out. As to be predicted, manufacturers of seat covers and wiring harnesses with modest levels of added value were among the first to arrive. Over time, businesses with a higher standard of quality took their place, including Bosch, Continental, ZF, Brose, Michelin, and Johnson Electric.

Today more than 95 000 people are working in automotive industry. The sector generated almost EUR 5 billion turnover in 2021 according to official data. The strategy of the local government is to go for more high-end products, with more know-how and value added.


Research and development capacities

Serbia has been implementing a dual education system based on the German model since 2018. The three biggest cities in Serbia are also the three largest technical education hubs.

The first, of course, is Belgrade, the country’s capital. There, the mechanical engineering and electrical engineering faculties have a long history and are joined by the departments of traffic and logistics, organizational sciences, and metallurgy to form Serbia’s largest and most diverse engineering pool.

The Novi Sad Faculty of Technical Sciences is well known for emphasizing cutting-edge fields including mechatronics and software development. The third-largest city in Serbia, Nis, is popular with having a thriving university and with being an electronics powerhouse. Mechanical engineering is well-developed at Kragujevac University. There are other smaller technical schools in Novi Pazar, Cacak, Zrenjanin, and Kraljevo. More than 7000 engineers graduate annually from Serbia’s eight tech-u centers in the fields of mechatronics, electronics, manufacturing, IC engines, ICT, quality management, or aeronautics.

The tendency of global corporations investing in R&D initiatives is relatively new, as Serbia had to first establish itself as a productive location for sophisticated manufacturing activities. However, these investments are being pioneered by top-tier industry giants like Continental, Bosch, ZF, or Brose. As a result of their successful track record, the government has already announced plans to increase its funding for educational institutions, RAS reports.



The automotive industry in Serbia has recently seen significant capital-intensive investments that include cutting-edge production methods and high-tech goods, local authorities report. Just a few of them are: the new BMTS Technology plant in Novi Sad is the OEM supplier of next-generation turbochargers for clients like PSA, VW, and BMW.

The new ZF E-mobility factory in Pancevo manufactures electric motors and generators for hybrid and electric drives. Companies like Chinese Mei Ta, which built the largest automotive parts foundry in the Balkans, Robert Bosch, which built a plant for wiper systems, and factories specializing in the production of electric motors for automotive applications run by industry titans like German Brose and Hong Kong Johnson Electric, are also present in the country.
Tires are one of the most significant products of the Serbian automotive industry. Michelin and Cooper Tires have operations in Pirot and Krusevac, and Linglong Tires of China and Toyo Tires of Japan recently joined them.

The majority of components suppliers, due to their size, fall under the SME category, and unlike the huge system suppliers, there is a significant number of regional Serbian businesses among them. This segment addresses the Tier2 and further part of the chain, with companies that take care of stamped, pressed injected, forged, casted, machined and such elements.


Institutional and branch support

RAS places a specific emphasis on the automotive industry since it is viewed as essential to the growth of regional competencies, while also raising the value added of goods created in Serbia and improving the investment climate. The goal of the RAS Suppler Development Program is to offer professional advice in various firm management areas while also offering financial support for investments in machinery and equipment. The program is specifically designed for the needs of SMEs, and a broad multinational advisory board is in charge of it.

In order to encourage the continued growth of this sector, RAS is also urging foreign businesses to think about forming joint ventures with regional Serbian suppliers in order to create synergies and broaden each party’s view of the market.

The Serbian Automotive Cluster – AC Serbia network, includes numerous local companies and institutions that are producing automotive parts and components, respectively providing services in the automotive sector. One of the branch organization’s goals is to connect businesses and public, scientific, and development entities in order to undertake cooperative projects, achieve a certain standard of quality, and establish recognizable brands. Members of AC Serbia benefit from increased global competitiveness as a result of this.