1st ICAI 2020

International Conference on Automotive Industry 2020

Mladá Boleslav, Czech Republic

Table 1: Four EU-27 countries with the highest ratio of automotive industry turnover to GDP

Automotive industry turnover to GDP Automotive industry turnover per capita (in EUR) 2018 2017 2016 2015 2018 2017 2016 2015

Country

Slovakia 33,7% 32,3% 32,7% 29,6% 5 557,5 5 014,0 4 879,9 4 359,3 Czechia 23,6% 27,4% 26,2% 25,5% 4 609,4 4 962,1 4 373,6 4 081,1 Germany 22,2% 24,5% 24,2% 24,6% 8 942,9 9 613,2 9 208,0 9 136,6 Hungary 19,6% 20,4% 14,3% 13,5% 2 680,6 2 611,4 1 678,8 1 540,2 Source: Authors’ calculations using the data of Amadeus database and Eurostat Pre-tax operating profit margin in the EU-27 is around 4% overall. In the period under review, the most successful year was 2017, with an operating profit margin of 5.15% (total for all EU-27 countries) and the worst year was 2015, with an operating profit margin of 3.37%. There is considerable variability in the results among countries (see Figure 2). Countries with the most profitable automotive industry are Luxembourg (15.3% margin in 2018), Denmark (13.23%) and the Netherlands (8.08%). In terms of the absolute amount of profit in EUR, the Netherlands is clearly the most important of these locations for the EU economy. The margins of the countries with the highest share of sales in GDP (Slovakia and the Czech Republic) are approximately 4-5%. Germany’s margin is higher and stands at 5.8% in 2018. Figure 2 suggests that there could be a negative correlation between the automotive operating profit margin and the share of turnover to GDP. Table 2 displays the results. A negative correlation was identified not only between the operating profit margin and the automotive industry to GDP but also between the operating profit margin and the automotive industry turnover per capita. It is therefore clear that the higher the amount of automotive production in a country, the lower the return on sales (profit margin). Surprisingly high is the measured positive correlation between the operating profit margin and GDP per capita. It was found that the higher the GDP per capita, the higher the profitability of sales. The exception is 2016. Here the Pearson correlation coefficient is only 0.061. A closer examination of the data revealed that this low value was reached due to the one-off extremely low operating profit margin of Luxembourg in 2016. If this one-off fluctuation did not occur, the correlation would be comparable with 2015 and 2017.

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