Slovenian auto-industry going strong as Renault, Magna confirm investments

Slovenian auto-industry going strong as Renault, Magna confirm investments
By bne IntelliNews January 12, 2017

Canadian automotive giant Magna International has confirmed plans to start construction of a paint shop in Slovenia in the second quarter of the year. The news followed a January 11 announcement from Revoz, the Slovenian subsidiary of French car maker Renault, that it will create over 300 new jobs at the end of January before it starts producing a new Clio 4 model in March.

Both investments are important for Slovenia’s economy, since its automotive industry generates one tenth of the country’s GDP and an even larger share of its exports. According to the business portal investinslovenia.org, exports by Slovenia’s automotive industry in 2015 totalled €3.7bn, with key export markets including EU countries Austria, France, Germany, Italy, Spain and the UK, as well as Mexico, Turkey and the US. In 2015, the country’s total exports amounted to €23.94bn while imports totalled €23.19bn and the export/import ratio stood at 103.2%.

According to Magna CEO Donald Walker, construction of the company’s paint shop is scheduled to begin in the second quarter of this year as Magna's nearby Steyr assembly plant in Graz, Austria, starts assembling the 5-Series sedan for BMW AG and a vehicle for Jaguar Land Rover, the Canadian Globe and Mail reported. The shop will employ 400 people. 

The new paint shop will be located about 30 minutes away from Graz, which is just north of the Austria-Slovenia border. Magna picked Slovenia  both for its proximity to Graz and for its good transport connections.

The Slovenian government has identified the possible investment as a strategic opportunity for Slovenia and the region plagued by high unemployment, Slovenian Press Agency (STA) reported. A a special act to guarantee favourable conditions for the investment was therefore passed in parliament in mid-December. 

The registered unemployment rate in Slovenia fell throughout the first three quarters of 2016, only rising marginally in October, according to the Slovenian statistical office. The jobless rate in September was the lowest since December 2009. As of 2015, 268 companies operated in Slovenia’s automotive industry and they employed 16,856 people.

Meanwhile, Revoz remains Slovenia’s only car manufacturer and the number one Slovenian exporter. Revoz spokesperson Nevenka Basek Zildzovic told a press conference on January 11 that the plant employed a workforce of 2,030 regular workers and almost 500 agency workers at the end of 2016.

Renault has been one of the most popular brands in Slovenia since the car manufacturer became a subsidiary France’s Renault. In 2016 it held a 12.8% slice of the market, putting it into second place after Volkswagen. 

As the local auto-manufacturing and components sector strengthens, Slovenia has also posted strong car sales figures for 2016. 

New car and van sales in Slovenia increased by 10% in 2016 in the fourth consecutive year of growth, peaking at over 70,000, according to data from the Chamber of Commerce (TZS), STA reported. 

The improvement of the figure indicates that Slovenia is about to completely exit economic crisis after it was hit by the global recession in 2008 and 2009 followed by the Eurozone crisis in 2013. The first indicator of the economic crisis in Slovenia was a drop in car sales.

 

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