The automotive industry in Bulgaria, formed by around 100 large enterprises, with more than 33,000 employees, generates a revenue of over €1.5 bln annually.
While the country hosts only one car manufacturer with an assembly plant, the Chinese Great Wall company, the other players – mainly Tier 1, 2 and 3 suppliers – produce a wild spectrum of components for the global car market (from engines and engine components; through electronics and electric components; to powertrain systems, assembly and interior components).
The automotive sector consists of mainly light manufacturing, along with non-core suppliers of system design and software, yet its revenue represents 3.5 percent of the country’s GDP and its profit exceeded €110 mln last year. And the positive tendency is to continue, with the sector seeing a €550 mln investments in 2016 and a forecasted steady growth by the year 2020.
Last year Colliers, in partnership with Automotive Cluster Bulgaria, conducted a survey among the largest automotive components-production companies to place the country at the top of the list in terms of attractiveness to the automotive sector in Europe. With main advantages indicated as low labour costs, EU membership, proximity to customers and producers, and corporate tax and tax incentives.
Some of the largest European automotive companies, following the overall trend of moving their supply chains south-east, identify Bulgaria as a top location thanks to its low corporate tax, a flat 10% income tax levy (with only Hungary offering a lower corporate tax rate in the EU, 9%, yet compared to relatively higher labour and production costs); the EU membership as a guarantee for political and economical stability and harmonisation, free movement and duty free trade with the other member countries where producers and suppliers are located; and the access to EU funds available for cooperative research and innovation in the automotive sector.
Therefore, over 60% of the companies, that already operate within the automotive sector in Bulgaria, consider to expand their production capacity, with 70% of the automotive suppliers on the market intending to expand their client portfolio to supply more car manufacturers within the next 5 years.
Companies’ investment plans, along with surveyed plans to produce new products and hire and invest in the education of staff, further support the fact that they are largely satisfied with their current location.
16% of the non-represented businesses in the market, indicate Bulgaria as the preferred location for opening a new plant in Europe, thus the country is naturally expected to welcome many newcomers, with the electrical and electronic equipment segment, currently accounting for more than 70% of the market shares in terms of revenue, forecasted to keep dominating the industry in the next couple of years.
Both medium and long-term prospects for the automotive industry in Bulgaria are optimistic, with the market preparing for the future of the industry, driven by new business models of consolidation and partnership between OEMs, their suppliers, tech and service providers, for the joint development of new technologies and customised solutions.
EVS Translations Bulgaria, as a market leader for customised language solutions for top-tier automotive suppliers and automobile manufacturers, is currently attending the Sofia Motor Show, 14 – 22 October, to discuss the future requirements of its existing and potential international clients from the automotive industry.