Automotive industry in Croatia

Automation & RoboticsIndustrySouth-East European INDUSTRIAL Мarket - issue 1/2016

According to data by ACSEE Autoclusters, the automotive components production in Croatia developed as a part of the automotive vehicle production in ex-Yugoslavia (Zagreb Bus Factory in Croatia, IMV (Renault) and Maribor Truck Factory (TAM) in Slovenia, Zastava and Automobile Factory Priboj (FAP) in Serbia, and TAS (Volkswagen) in Bosnia).

Its development was based on the expertise and a strong tradition in relating sectors such as metal processing, welding, plastics, construction and agricultural machinery building. Croatian automotive components companies have a strong tradition in high precision and zero defect tolerance in manufacturing and their main advantage is the excellent quality level of their products. Most of them have both general standards like ISO 9001 and industry specific standards such as TS 16949.

Beside groups of companies in Zagreb, Nova Gradiska, Slavonski Brod and Split with a long experience in this industry, recently there have also been positive examples of several new local companies that achieved complete integration into international chains of part suppliers for world well-known car producers, namely PSA, GM, Fiat, BMW, Audi, Ford, Renault, Toyota, Volvo, Daimler Chrysler, etc.

This is emblematic of Croatia’s entrepreneurial culture and marketing mindset, as well as the availability of locally produced management talent and the underlying competitiveness of cost/quality/engineering skills combination in certain niches of the automotive components industry.

The Organisation for Economic Co-operation and Development’s (OECD) recommendation for regional investment strategy points that Croatian component suppliers seem well positioned to respond to the challenge of strengthening collaboration with their customers. Many have successfully developed a new product line or service, or upgraded existing ones in the past three years.

The use of AutoCAD and other software for the design and development of components is relatively widespread compared with the situation in other Western Balkan economies. Based on the results of the RCS and company interviews, OECD determined that many Croatian part suppliers already collaborate with their customers in areas that require a deep, stable and medium- to long-term business relation, such as product development, product design and production planning. They do so at a level which remains virtually unmatched elsewhere in the region. All these elements point to the existence of relatively deep and strong relationship between local suppliers and international customers.

Industry Track Records
Croatian automotive parts producers have proven their high standards and quality as they deliver products to some of the most known upper-market car producers such as Bentley, Ferrari, Mercedes, Alfa Romeo, McLaren, Lamborghini and Aston Martin.

Small But "Croative" Companies
In 2007 in Croatia there were 74 vehicle parts production market players, 68 of them small companies: mostly small enterprises specialized in metal processing, plastic processing, and electronic parts production. Small enterprise structure enables higher flexibility, better responsiveness to a client’s needs, possibility to enter market niches and adapt to new products and technologies.

Croatian spare parts manufacturers deliver more complex and high value added products (instead of competing in mass production like car assembly) which requires higher technical skills, innovation, flexibility and design.

The automotive industry is represented solely by automotive components manufacturing. The most important players in the industry are members of the Croatian Automotive Cluster which comprises 50 companies with a total of 6,000 employees. Their combined turnover was 420 million euro in 2010. Leading automotive components producers in Croatia include CIMOS, Yazaki, Boxmark Leather and AD Plastik.

At least 90% of the Croatian automotive sector production is exported yearly to Germany, Austria, Italy, France and other European countries for clients like Volkswagen Group, Ford, Opel, BMW and Renault. Croatia exports mainly electronic components, safety systems, braking systems, seats and steering wheels.

To attract large international automotive suppliers Croatia relies on the huge concentration of motor vehicle manufacturers within 600 km from Zagreb, such as in Slovenia, Serbia, Hungary, Slovakia, Germany, Austria and Italy. Another benefit are the low shipping costs for manufacturers in Asia and the Middle East.

The development of the Croatian automotive industry is based on a long tradition in related sectors such as metal production, welding, plastics manufacturing and engineering. Croatian companies dealing with the production of automotive parts have a tradition in high-precision manufacturing with zero tolerance for breakdowns and the main competitive advantage is the excellent quality of their products.

Over three quarters of the added value in the automotive industry is realized in the production of components for installation and activities related to the development of vehicles and related processes. The Croatian market has companies that have successfully integrated into the system of supplying spare parts for the world’s top automobile manufacturers - PSA, GM, Fiat, BMW, Audi, Ford, Renault, Toyota, Volvo, etc.

Croatia also boasts the production of electric cars, such as DOK-ING and Concept One by Rimac Automobili. The benefits of joining the automotive industry in Croatia is a well-educated workforce, excellent infrastructure and proximity to the markets and automotive production facilities in the countries of Western and Central Europe.

Croatian automotive industry employs 2,103 people
According to ACSEE data an additional 7,000 people are employed in related industries. Average gross salary paid in the automotive industry is 1,011 EUR (as of 2012). Share of the automotive industry in total exports is 1,8%. About 90% of the revenue in the automotive industry is generated through exports.

Major automotive industry representatives in Croatia