PAUL MCVEIGH

A European car factory where times are good

Paul McVeigh is managing editor at Automotive News Europe.Paul McVeigh is managing editor at Automotive News Europe.
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At Kia's car factory in Zilina in Slovakia, which lies in the heart of middle Europe, there is no sign of the crisis gripping the region's auto industry.

When I visited the plant earlier this week, workers were busy carrying out their tasks purposefully and with smiles on their faces. They have reason to be happy. While their counterparts in western Europe at Opel, Fiat and PSA/Peugeot-Citroen fear for their future, Zilina's workers can look ahead to continuing good times.

Kia expects production at the factory, which builds the Cee'd compact, Venga compact minivan and Sportage SUV, to top 285,000 units this year, a new record following last year's all-time high of 252,250.

Kia has improved its EU market share by six percentage points to 2.7 percent in the first nine months, helped by a 20 percent increase in unit sales to 250,900.

The factory is also benefiting from the expanding Russian market. A large part of the production is exported to Russia where Kia was the third best-selling brand through September after Lada and Chevrolet with sales up 25 percent to nearly 140,700. Zilina-built cars are sent to Russia as semi-knockdown kits and reassembled in Kaliningrad so they qualify for lower import tariffs.

Some 90 km along the road from Zilina and over the border in Nosovice in the Czech Repubic, Hyundai's plant is also doing well. Production is expected to grow to 300,000 units this year, up 20 percent on last year. The plant builds the i30 compact, ix35 SUV and ix20 minivan. It benefits from synergies with the Kia plant, which produces engines for both factories while Nosovice builds transmissions.

Both plants share a large local supplier base. Zilina sources 50 percent of its components from suppliers in the immediate vicinity. Some 70 percent of all parts used at the plant are made in Europe.

Kia executives are too cautious to gloat about the brand's European success. They know that although the brand is growing fast in Europe, maintaining the growth will be tough. Nevertheless, when asked about the effect of Europe's woes on their business, they whisper, almost apologetically, "We're having a good crisis."

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