The outlook for the auto industry in Central Europe is optimistic, in spite of the recent war in neighboring Yugoslavia and economic turmoil in Russia.
The Czech Republic - with the continuing turnaround of Skoda under Volkswagen - and Poland have the brightest prospects. Poland is soon expected to overtake Holland as the sixth largest new-car market in Europe.
Korean manufacturers in particular have been aggressive in central Europe. In 1998 they recorded a 12.4 percent market share in the region - compared with 5.1 percent for their Japanese rivals.
With the number of main dealer outlets soaring by 31 percent over the past year, it's clear that a new automotive infrastructure is gradually transforming these old state-run economies.
Automotive News Europe correspondent Mark Bursa looks at the recent development of the four major central European markets, the Czech Republic, Poland, Slovakia and Hungary.
Czech Republic: Skoda dominates static market
The Czech Republic was the fastest of the central European markets to emerge from communism, largely thanks to Volkswagen's purchase of Skoda in 1990.
The auto industry now accounts for 11 percent of the Czech Republic's overall industrial production, Skoda spokesman Vratislav Kulhanek said at the Brno auto show last month.
However, the Czech market is struggling this year to maintain its post-communist momentum. In the first four months of this year, official importers and domestic producers sold 44,349 new passenger cars, nearly 4 percent less than in the same period of 1998. And in spite of an overall export-driven increase in production, Skoda's domestic market share has dropped this year by 7 percent to 50.1 percent.
In the first five months of this year Skoda sold 158,585 cars worldwide, up 9.1 percent from the same period last year. Exports to over 60 countries now make up more than 80 percent of its sales.
Western Europe remains the major market for Skoda, with exports to the region up 17.9 percent to 82,195 in the January-May period.
Sales to other central and eastern European markets have also grown. In the first five months Skoda sold 41,888 units in central and eastern Europe, excluding the Czech Republic, a rise of 20.7 percent. This is in part helped by production of complete knockdown kits in Poland. A similar venture in Russia has been announced.
The country's other automakers are in the commercial vehicle sector - the largest, Avia, was bought by Daewoo in 1994 and is building Daewoo light vans.
The major truck producer is Skoda Plzen, which controls the Liaz and Tatra brands. Skoda Plzen has had a troubled past, and is in the process of selling Tatra to a group of US investors, SDC International, which plans to export Tatra off-highway trucks to South America.
Poland: Could become sixth-largest car market
Poland remains central Europe's economic powerhouse. Its market continues to grow, and by the time Poland is admitted to the European Union in the early part of the next decade, it is likely to have passed the Netherlands in terms of car market size.
Sales in Poland were 158,641 units in the first-quarter of 1999, nearly half of the regional total.
Benefiting from Poland's rise is Daewoo, which beat General Motors for control of FSO back in 1995 and is turning Poland into its European production center. The Koreans plan to boost investment at Daewoo-FSO in Warsaw by $400 million to $1.5 billion in 2001. Annual production capacity for cars and light trucks will expand to about 540,000 from 350,000. Nearly half of total output will be exported to central and western Europe.
Daewoo, along with Fiat, dominates the local market, though new competition is arriving. General Motors has recently opened its new plant in Gliwice, building initially the old-generation Opel Astra. However, Gliwice will be GM's production center for its new city car, which is being codeveloped by Suzuki. This car will be based on the Concept A shown at Geneva in March. Suzuki will build its own version of the car in Hungary, and the two plants are working together on the project, sharing much of the componentry.
Volkswagen's plant in Poznan, which builds complete knockdown kits, is rapidly moving toward full production, and Ford's plant in Plonsk may follow.
Other automakers are turning to Poland for parts production. Isuzu has just opened a large diesel engine plant in Tychy, to serve automakers throughout Europe. Toyota reportedly plans to build a $167 million transmission factory in Poland.
Slovakia: Sales are faltering after strong start to year
Slovakia is very much the poor relation of its former other half, the Czech Republic. Indeed, Slovakia will not be in the first wave of former communist states to join the European Union.
After a strong start to the year, the country's car market is faltering. In April, a total of 5,449 passenger cars were sold in Slovakia, about 1,000 less than in the previous month, according to the Slovak Association of Automotive Industries. In the first four months of 1999 there were 19,225 passenger cars sold, while the same period of last year saw sales of 18,828.
Skoda has a dominant position in the Slovak car market. In the first four months of this year, Skoda sold 10,379 cars in Slovakia. Last year it sold 30,967 cars, a 44.8 percent market share. Daewoo is second with sales of 8,649 cars last year, a market share of 12.5 percent.
The focal point of the Slovak car industry is Volkswagen Bratislava, which started making cars mainly for export in December 1991. Last year VW Bratislava turned out 125,000 cars. It made 24,000 units, mainly Passats, in first three months of this year. Production of the new Bora sedan is also under way there.
Jozef Uhrik, the president of the Slovak Association of Automotive Industry, said at the recent international auto show in Bratislava that parts production in the country had been growing by 25-30 percent annually in the past few years. Last year the Slovak auto industry registered a trade surplus of nearly $1 billion, he said.
Hungary: Suzuki, Audi play vital manufacturing roles
Hungary is unique in central Europe, as it is the site of a Japanese transplant. Magyar Suzuki in Esztergom has been producing earlier-generation Suzuki Swifts since it opened in the early 1990s, but it is about to take on a bigger role.
Magyar Suzuki is investing $100 million to launch a new micro-minivan, developed from the Wagon R platform jointly with General Motors. GM will make its version of the vehicle in Gliwice, Poland, starting in January 2000.
Last year Magyar Suzuki built 65,789 Swifts. Domestic sales were 23,788 units in 1998, up 3 percent, while exports fell 12 percent to 42,000 units from 47,700 units. Magyar Suzuki expects to make 70,000 units in 2000, its annual production capacity, with the micro-minivan production to some extent substituting for the Swift.
Suzuki is now Hungary's top-selling new-car brand, a position helped by General Motors' decision to stop making the Astra locally and convert its Szentgotthard plant into an engine plant.
Magyar Suzuki has said it aims to boost annual capacity to 100,000 units by 2002, timed with the introduction of a Swift replacement, which would account for half the production.
Both Magyar Suzuki and Opel increased local sales in the first quarter of 1999. Magyar Suzuki sold 7,620 cars in the first quarter of 1998, a 61.9 percent increase. Opel sales were up 14.4 percent to 3,846 cars. The Hungarian car market is expected to reach 120,000 units this year.
The other major car producer in the country is Audi, which has made Hungary the production center for engines and for its TT coupe.
The success of this car has prompted Audi to raise production twice already this year, doubling the original target level from 20,000 to 40,000.