The automotive industry is one of Europe’s great success stories, generating €1 trillion in income or 7% of total GDP in 2022. It employs 13.8 million people or 6.1% of the EU total and supports €60bn, or around 30% of the total, annual EU R&D investment.
The industry is now benefitting further from nearshoring, the megatrend that is seeing companies bring production closer to their end markets in order to secure their supply chains. This has been driven by the Covid pandemic, as well as well as geopolitical tensions and increasingly protectionist regulations from governments. In Europe, the nearshoring trend is a big contributor to the boost in demand for European industrial and logistics space as final assembly manufacturers and tier one and tier two automotive suppliers are increasingly moving their production to Europe.
Crucial to reshoring and setting up new sites for these firms is access to industrial and logistics properties tailored to their requirements that also slot into their supply chains and local automotive business ecosystems. CTP, as Europe’s largest listed operator and developer of logistics real estate by gross lettable area, has networked automotive logistics hubs for a broad range of tenants who are typically powertrain agnostic, supplying both the EV and combustion market, across its portfolio in the automotive sector heartlands of Central and Eastern Europe, Germany, and the Netherlands. With such a significant and extensive landbank, combined with its local and industrial expertise, CTP is witnessing the nearshoring boom first hand.
The automotive market and the nearshoring rush
Both domestic and international manufacturers are being affected, with reshoring by European manufacturers of some of their operations with Asian and Chinese producers joining them. The range of tariffs imposed by the European Commission on a number of imported EV goods is further prompting the relocation of automotive production with EV manufacturers and parts suppliers from China most likely to invest in plants in Central and Eastern Europe (CEE) to protect their export market.
In August 2023, CTP opened its first office in Asia, reflecting the increasing demand for Asian businesses to expand their production capabilities closer to their European customer base.
“Asia is an extremely important market for us, with an increasing number of our long-term clients looking to base more of their operations closer to European markets as the rise in nearshoring gathers pace,” says Remon Vos, CEO of CTP.
“Establishing our office in Asia enable us to better support our clients' evolving operational requirements in Europe, where we have immediate access to a significant landbank across CEE, and as an owner-developer we can create and manage space tailored to our clients' requirements in the long-term.”
The CEE, with its close proximity to Western European markets, is exceptionally well placed for multinationals nearshoring and has firmly established itself as a highly efficient automotive manufacturing hub, able to compete in the European and global markets. A strong manufacturing base, a wealth of skilled human capital, attractive labour costs, market connectivity and robust and growing economies have all combined to make the region a nearshoring hot spot. The continued growth of high-tech industries such as the EV industry is contributing to the demand for facilities in Europe, with its access to skilled and competitively priced labour essential for manufacturing automation.
One example of a CTP client increasingly nearshoring is Taiwanese electronics manufacturer Inventec, which supplies some of the world’s largest automotive companies. “We are bringing more of our manufacturing to CEE to reduce risk in our global supply chain, but also because our customers want Inventec to have more operational capabilities in Europe to support their businesses and reduce carbon footprint in their supply chains,” says John Busby, Director of Inventec’s Czech Republic operation.
“We already occupy almost 30,000 sqm across two CTParks in the Czech Republic, and CTP is now creating 52,000 sqm of built-to-suit space for us in the Czech Republic that we will move into this year, bringing all our European manufacturing space under one roof.”
CTP currently has automotive sector clients in the Czech Republic, Slovakia, Germany, Romania and Hungary, representing 20% of its total portfolio across Europe.
This success in attracting automotive clients is attributed to CTP’s business parks having excellent road, rail, and even local airport connections, as well as the expertise to facilitate the client’s specific needs and to navigate the complex local, national and EU regulatory framework to obtain all the necessary permits and achieve compliance.
Leasing space is more often than not seen as a more attractive option than ownership, with the lengthy and complex procedures required for building permits and volatile supply and build costs involved in owning seen as high-risk and inflexible. CTP offers immediate access to a diverse mix of industrial spaces and locations which can be tailored to a client's specific needs, fixed costs from the outset, and, as owner developer, a vested interest in supporting a tenant's long-term commercial ambitions.
Since 2015, car production in the CEE countries has increased by 41%, with the region surpassing Germany in nominal car production in 2022. Automotive firms are continuing to shift car production to the CEE countries and production volumes have now exceeded their pre-pandemic levels. Indeed, car production in the CEE has rocketed by 50% over the past eight years, according to Eurostat.
Currently, there are a total of 33 car manufacturing plants within the six CEE countries. Although Western European brands, mainly from Germany, France and Italy, are dominant, Asian manufacturers, such as Hyundai, Toyota and Suzuki, play an important role, with the main news being the growth of Chinese automotive brands and suppliers.
Chinese firms directly investing in Europe include automotive manufacturers and their suppliers, particularly battery producers, and have been concentrating and heavily investing in Germany, France, UK, Hungary and increasingly other CEE countries.
For example, recently, Chinese manufacturer, BYD, which has overhauled rival Tesla as the largest producer of EVs, announced in 2023 it is building a new plant in Hungary and is looking to build a second plant in the European Union. Great Wall is also looking at Hungary for a new plant. Volvo, a brand of the Chinese firm, Geely, is planning to shift production of its new EX30 EV from China to Ghent, Belgium.
CTP’s automotive clients include high-performance braking systems manufacturer, Brembo, automotive parts giant, Forvia, Chinese automotive interior manufacturer, Yanfeng, tyre manufacturer, Bridgestone, and Chinese EV manufacturer, NIO. CTP has provided unique solutions for these automotive clients with, for example, extensive assembly and production areas, high-precision environmental controls, ample storage for parts and finished items/vehicle storage, ESD floors (floors that prevent the build-up of electrostatic charge that can harm sensitive electronic components) and clean rooms. They also feature integrated logistics spaces with drive-in bays and advanced security systems, catering to the unique needs of automotive manufacturing and distribution.
The trends for both nearshoring and production in Europe are only anticipated to accelerate, and occupiers and investors in logistics and real estate who act sooner rather than later are better placed for the future.
CTP – tailored fit-out for automotive clients – case studies
Nidec, CTPark Novi Sad, Serbia
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For Nidec, the Japanese world’s leading electric motor manufacturer, CTP provided a 25,000 sqm production facility and HQ, that is expandable to 60,000 sqm. CTP’s focus on meeting Nidec’s needs meant strict compliance with local regulations and rapid construction, aided by excellent relationships with local authorities for smooth progress. Special features include advance cooling, clean rooms and compressed air systems essential for Nidec’s manufacturing.
NIO at CTPark Budapest West, Hungary
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In 2022, Chinese automotive manufacturer NIO moved into a 10,000 sqm facility at CTPark Budapest West, where it began operating a self-developed Battery Swap Station which doesn’t charge the depleted battery, but replaces it with a fully-charged one. On behalf of NIO, CTP did a tailored fit-out, including heavy-duty cranes, an intelligent access control system, a special, tailored fire protection system, the construction of an electric car battery changing station in the parking lots, and a demonstration battery swap station.
Vitesco Technologies, CTPark Ostrava Hrušov, Czech Republic
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In 2023, Vitesco, a German automotive supplier of drivetrain and powertrain technologies and an existing CTP client, leased an extra 40,000 sqm of space at CTPark Ostrava Hrušov in the Czech Republic. This is in addition to the company’s existing 8,000 sqm R&D facility at CTPark Ostrava.
“For Vitesco, the flexibility offered by CTP is very important. Especially, the flexibility of growth and the adaptation of spaces for their strictest needs,” says Vojtech Perka, Senior Business Developer at CTP.
The company, which has operated a high-tech R&D facility at the location for the past 10 years, is using the new space for a new factory to produce control units for electric vehicles, and CTP is customising the space to match Vitesco’s requirements for a controlled production environment and laboratory space.
Jiri Linhart, Head of Location at Ostrava, and Head of Common Engineering for Vitesco, adds: “With CTP, we have been able to build to our exact requirements, with two large and very specialised laboratory buildings including workspaces with extremely accurate environmental stability.”
