2nd ICAI 2022

International Conference on Automotive Industry 2022

Mladá Boleslav, Czech Republic

The lower local value added in Hungary compared to Czechia can be seen already from the above excerpts from the interviews. There are only a few locally owned companies supplying the local subsidiaries, mainly that of Suzuki, with various parts and components. We interviewed two of these companies. One of them is medium sized and supplies only Suzuki, the other one is a large company, and besides Suzuki, large truckmakers (among others) are its most important partners. Furthermore, though there is a slow increase in local value added, two carmakers concentrate on assembling and Audi produces engines as well. Despite relatively higher value added in Czech automotive sector, domestically owned firms point out to significant rigidity and limited possibility for upgrading in the automotive sector. Further, most 3-tier suppliers are in a captive position. In Hungary, we have found an explanation for the declining importance of Japanese imported inputs from our interviews. While at the beginning of its production, Suzuki relied to a great extent on imported inputs from Japan, later on, when the number of cars produced, reached a higher level, and thus it was worth for these Japanese suppliers to follow their partner to Hungary and establish a subsidiary, as economies of scale factors were now present. This threshold level was reached before the 2008-9 financial crisis, and we can see the establishment of Japanese component-producing subsidiaries in Hungary since around 2008. Thus, there is still a considerable extent of Japanese inputs, produced by Japanese-owned subsidiaries, though not in Japan but in Hungary. In Czechia, the increasing role of backward links from Korea are related to the establishment of Hyundai Motor Manufacturing Czech in 2006. 4. Conclusion Both Czechia and Hungary are highly integrated into automotive global value chains. However, their positions in the GVCs differ. The analysis of the international input output tables has revealed that in the case of Czechia the international value chains of the automotive industry production are more concentrated both in terms of the supplying industries and regarding the geographic location of suppliers (Poland, Slovakia, Germany): the importance of the simple value chains is stronger than in Hungary, even if the length of the global value chains are longer in absolute terms. In addition, the concentration involves the powerful local supply chains as well. In terms of dynamics the complex links are extending as well as there is a shift towards a downstream position with higher value added stages of production. The Hungarian automotive value chains are more internationally networked with high participation and import contribution, the latter is mainly concentrated to Germany. The network is much diverse than the Czech pattern; however, more concentrated by value. The main experience is the shift from the local to the German and partly Czech backward production links while the value added content has diminished. The position faces an upstream shift with a highly concentrated backward structure. The emerging domestic links and the fall of the Japanese relationship have called for a critical discussion of the data and demand the ownership analysis of the domestic production. The distinct position of Czech and Hungarian firms in automotive GVCs has been confirmed by interviews among OEM and automotive suppliers. Despite

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