Dana’s Perfect Circle Tightening Ring Around Aftermarket Expanding Central European Network Country by Country Perfect Circle is hustling to grab market share in Central Europe’s automotive parts aftermarket. Owned by the Dana Corporation, the manufacturer of piston rings, pistons, and cylinder liners is focused on expanding its sales network throughout Central and Eastern Europe, customizing its product offerings to each market, and bolstering its market share. Mirek Staniszewski is leading the charge in Central Europe. Mr. Staniszewski is Eastern Europe Sales Manager for Perfect Circle Distribution Europe. Prior to joining Perfect Circle, Mr. Staniszewski worked for BMW and Renault. He studied at the London School of Economics and is a former national and international rally drivor and navigator. The CEAR interviewed him in Poznan, Poland in May. CEAR: How are you expanding your presence in the Central European aftermarket? Staniszewski: I’m working now on choosing the right partners. I’ve enlarged my network from 7 partners last year to 12. Feature Country: Czech Republic • Regional Special Report — Plastics: p. 5 • Slovenia’s Auto Importers Shop for New Businesses: p. 6 • Intellectual Capital Index: p. 9 • Opinion — Hungary’s Parts Production Will Rise: p. 10 • Building Supplier Quality — Supply Base Expectations: p. 11 • Engineering in Central Europe: p. 14 • Czech Tax & Hungarian Legal Updates: p. 15 • Czech Stock Statistics: p. 21 • Investment Opportunities: p. 17 • Delphi’s New Drive-By-Wire Tech: p. 22 • Lucas Rolls Out Fast Fit Centers in Czech Republic: p. 24 BULGARIA CIS CZECH REPUBLIC HUNGARY POLAND ROMANIA RUSSIA SLOVAK REPUBLIC SLOVENIA Since 1996 The Source For Automotive Information On Central Europe™ September 1998 On The Web at http://www.cear.com™ Volume III, Issue 8 ISSN 1088-1123 CENTRAL EUROPE AUTOMOTIVE REPORT ™ In This Issue subsidiary Volkswagen Motor Polska will start producing diesel engines by mid 1999 in the Legnica Special Economic Zone. VW also plans to produce car seats at another plant in the Legnica Special Economic Zone. The car seats will be manufactured by Sitech, a joint venture in which VW owns 49% of the shares and Karosseriewerke Dresden GmbH holds a 51% stake. Production is expected to start in March of 1999. Sitech will reportedly design and produce car seats for VW Group companies. Zasada Selling Truck Making Unit To MAN On July 17, 1998 the Sobieslaw Zasada Group’s truck manufacturing unit STAR SA signed a letter of intent to cooperate with the German company MAN Nutzfahrzeuge AG. The cooperation will involve the production and sale of medium-capacity trucks. The agreement calls for the modernization of STAR, based in Starachowice, Poland, by MAN’s sister company MAN - Steyr Nutzfahrzeuge AG. In the first stage, MAN will help STAR with the modernization of already produced trucks, primarily involving the driver’s cabin. The latest models will include MAN engines and components. The cooperation will also result in the creation of a joint venture company in which MAN will hold a 51% stake and STAR will own the remainder. According to Zasada officials, the company is restructuring its operations to improve profitability. Talks are underway with Summary • • • Volkswagen Targets Poland for Engine & Seat Production • • • Zasada Sells STAR to MAN • • • UT Automotive Opens Wire Harness Plant in Poland • • • Major Bond Issue for Fiat in Poland • • • Henkel/Daewoo JV in Poland • • • Truck Maker Tatra Sold to SDC • • • VW Back in Sarajevo • • • Skoda Building $40 Million Parts Center in Czech Republic • • • VW Boosts Investment in Slovakia • • • NABI Secures Bus Contracts in US Poland VW to Invest in New Engine & Seat Plants in Poland Volkswagen AG announced in July that it is planning to build a car engine plant in Polkowice, Poland. VW’s wholly owned Regional Market Highlights Profile Continued on Page 2 Continued on Page 12 CEAR Central Europe Automotive Forum™ at http://www.cear.com/autoforum. The CEAR.COM™ W eb Site averages over 4,500 hits per month! Mirek Staniszewski
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Dana’s Perfect CircleTightening RingAround AftermarketExpanding Central EuropeanNetwork Country by Country
Perfect Circle is hustling to grab marketshare in Central Europe’s automotive partsaftermarket. Owned by the DanaCorporation , the manufacturer of pistonrings, pistons, and cylinder liners is
focused on expandingits sales networkthroughout Centraland Eastern Europe,customizing itsproduct offerings toeach market, andbolstering its marketshare.
Mirek Staniszewski isleading the charge inCentral Europe. Mr.Staniszewski isEastern Europe SalesManager for PerfectCircle DistributionEurope. Prior to
joining Perfect Circle, Mr. Staniszewskiworked for BMW and Renault. He studiedat the London School of Economics and isa former national and international rallydrivor and navigator. The CEARinterviewed him in Poznan, Poland in May.
CEAR: How are you expanding yourpresence in the Central Europeanaftermarket?Staniszewski: I’m working now onchoosing the right partners. I’ve enlargedmy network from 7 partners last year to 12.
Feature Country: Czech Republic
• Regional Special Report — Plastics: p. 5• Slovenia’s Auto Importers Shop for New
Businesses: p. 6• Intellectual Capital Index: p. 9• Opinion — Hungary’s Parts Production Will
Rise: p. 10• Building Supplier Quality — Supply Base
Expectations: p. 11• Engineering in Central Europe: p. 14 • Czech Tax & Hungarian Legal Updates: p. 15• Czech Stock Statistics: p. 21• Investment Opportunities: p. 17• Delphi’s New Drive-By-Wire Tech: p. 22• Lucas Rolls Out Fast Fit Centers in Czech
Republic: p. 24
BULGARIA CIS CZECH REPUBLIC HUNGARYPOLAND ROMANIA RUSSIA SLOVAK REPUBLIC SLOVENIA
Since 1996
The Source For Automotive Information On Central Europe™
September 1998
On The Web at http://www.cear.com ™
Volume III, Issue 8 ISSN 1088-1123
CENTRALEUROPEAUTOMOTIVEREPORT™
In This Issue
subsidiary Volkswagen Motor Polska willstart producing diesel engines by mid 1999in the Legnica Special Economic Zone.
VW also plans to produce car seats atanother plant in the Legnica SpecialEconomic Zone. The car seats will bemanufactured by Sitech, a joint venture inwhich VW owns 49% of the shares andKarosseriewerke Dresden GmbH holds a51% stake. Production is expected to startin March of 1999. Sitech will reportedlydesign and produce car seats for VWGroup companies.
Zasada Selling Truck Making Unit ToMAN
On July 17, 1998 the SobieslawZasada Group’s truckmanufacturing unit STAR SAsigned a letter of intent tocooperate with the Germancompany MAN NutzfahrzeugeAG. The cooperation will involvethe production and sale ofmedium-capacity trucks.
The agreement calls for themodernization of STAR, based inStarachowice, Poland, by MAN’ssister company MAN - SteyrNutzfahrzeuge AG. In the firststage, MAN will help STAR with themodernization of already produced trucks,primarily involving the driver’s cabin. Thelatest models will include MAN enginesand components.
The cooperation will also result in thecreation of a joint venture company inwhich MAN will hold a 51% stake andSTAR will own the remainder.
According to Zasada officials, the companyis restructuring its operations to improveprofitability. Talks are underway with
Summary
••••• Volkswagen Targets Poland forEngine & Seat Production
••••• Zasada Sells STAR to MAN••••• UT Automotive Opens Wire Harness
Plant in Poland••••• Major Bond Issue for Fiat in Poland••••• Henkel/Daewoo JV in Poland••••• Truck Maker Tatra Sold to SDC••••• VW Back in Sarajevo••••• Skoda Building $40 Million Parts
Center in Czech Republic••••• VW Boosts Investment in Slovakia••••• NABI Secures Bus Contracts in US
Poland
VW to Invest in New Engine & SeatPlants in Poland
Volkswagen AG announced in July that itis planning to build a car engine plant inPolkowice, Poland. VW’s wholly owned
Regional MarketHighlights
Profile
Continued on Page 2 Continued on Page 12
CEAR Central Europe Automotive Forum™ at http://www.cear.com/autoforum. The CEAR.COM™ Web Site averages over 4,500 hits per month!
Mirek Staniszewski
2 September 1998 • CENTRAL EUROPE AUTOMOTIVE REPORT™ http://www .cear.com ™ © Central European Trade & Marketing, L.L.C. 1998
September 1998Volume III, Issue 8, ISSN 1088-1123
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potential investors regarding Zasada’sother vehicle manufacturing units.
In late May, Zasada shelved itscontroversial plan to produce cars inStarachowice with Hyundai. Accordingto Zasada, the agreement was terminatedbecause Hyundai withdrew from theproject’s co-financing arrangement andZasada was unable to obtain permissionfrom the Ministry of the Economy toextend the deadline for submittingrequired documents.
UT Automotive’s New Polish WireHarness Plant Open For Business
In June 1998, UT Automotive opened itsnew wire harness plant in Mielec, Poland.The 12,000 square meter facility, locatedin Mielec’s Special Economic Zone, willemploy 500 workers.
“With the new plant, Poland will becomeone of the major European wire harnessproduction centers for UT Automotive,”said Volker Heuzeroth, president of UTAutomotive Europe.
The factory will supply electrical systemsfor Opel cars made in Gliwice, Polandand harnesses for Ford’s new Focusmodel. The new factory cost $5 millionand, according to Luis Cabadaz from thecompany’s European management,completing the project will requireanother $5 million.
UT Automotive has been making wireharnesses in Poland since 1995, operatingout of temporary facilities in Mielec. In1997, the company’s exports from Polandtotaled $20 million. By the year 2000,UT Automotive plans to expand capacityand achieve exports of $100 million.
Fiat Poland Major Bond Issue
On July 9, 1998, Fiat Polska and FiatBank Polska announced the signing ofan agreement with the ING BankWarsaw Branch, Bank Handlowy wWarszawie SA, and Citibank (Poland)SA, for two separate short and medium-term bond issuance programs.
Under the five-year agreement, thecommercial banks agreed to place on thePolish and international markets bondsvalued up to a total of PZL 1 billion($290 million). The Fiat bond program isthe largest ever realized in Poland. Its
goal is to finance Fiat’s activities inPoland, including retail loans tocustomers of Fiat Auto Poland.
Investor Sought for Polish BearingFactory
The Polish government has decidedthat the rolling bearing factory FLTKrasnik (Fabryka LozyskTocznych) is ready to seek aninvestor. The factory has a 26%share in the local market for ballbearings and is counted among themost modern factories of its kind inCentral Europe. Customers includeFiat and Daewoo.
“The legal status of our land andbuildings is clear, and we are not indebt,” said Ryszard Mozgawa, thefactory’s director, encouragingprospective investors. In order tomaintain its market position, thecompany needs about PZL 200million ($60 million) to replace oldmachinery and test new products.
FLT’s sales in 1997 stood at PZL202 million, and net profit was PZL1.1 million ($320,000).
Henkel Joint Ventures withDaewoo FSO
Henkel Polska SA and Daewoo-FSO Sp. z o.o. have established thejoint-venture company HenkelTeroson Automotive Polska Sp. zo.o. with headquarters in Ciechanow,Poland. The new company willproduce adhesives, sealing materials,and coatings for the automotiveindustry. Daewoo holds 49% of thenew company’s shares and Henkelowns the remaining 51%.
Polmo Starts SuspensionProduction For Opel Astra
Polmo-Kalisz has started productionof complete front suspensionsystems for the Opel Astra Classic,following the purchase of a partiallycomputerized line for suspensionassembly from the Opel plant inBochum, Germany. Polmo-KaliszDirector Tadeusz Nowak said thatthe factory will deliver 50,000suspension systems per year, first tothe Opel assembly plant in Warsaw,
More Market Highlights onPage 4
CENTRALEUROPEAUTOMOTIVEREPORT™
Highlights Continued from Page 1
Ronald F. Suponcic, Jr.Publisher
Jeffrey A. Jones, Esq.Editor-in-Chief
1998EDITORIEDITORIEDITORIEDITORIEDITORIAAAAAL CL CL CL CL CAAAAALENDALENDALENDALENDALENDARRRRR
The Source For Automotive Information On Central EuropeOn The Web at http://www.cear.com
Issue Feature Automotive Reviews Special Reports Close Date
Jan 99 Poland Body/Chassis 1998 Year in Review/ Dec 10, 19981999 Forecast
Feb 99 Hungary Central Europe’s Vehicle Fleets Jan 10, 1999Executive of the Year
Mar 99 Czech Republic Components & Systems Auto Aftermarket Feb 10, 1999
Apr 99 Slovak Republic Marketing & Advertising na Mar 10, 1999
May 99 Romania/Bulgaria Electronics Auto Consultants Apr 10, 1999
Jun 99 Poland/Slovenia OEM Special: Who Supplies Who na May 10, 1999
Jul 99 Hungary Powertrain Exporting to Jun 10, 1999Central Europe
Aug 98 Not Published
Sep 98 Czech Republic Plastics Auto Engineering Aug 10, 1998
Oct 98 Slovak Republic Logistics Human Resources Sep 10, 1998
Nov 98 Romania/Bulgaria Interiors Real Estate Oct 10, 1998
Dec 98 Poland/Slovenia Financing na Nov 10, 1998
Regular Monthly Columns
Feature Country - featured country market overview and news, plus updates from around the regionProfile Interview - interviews with regional automotive executivesProduct News - information on new products, components, and vehicles in the marketOpportunity Spotlight - regional companies offering investment, joint venture, or partnership opportunitiesQuality Corner - information on improving supplier quality in the regionLegal Advisor - updates on legislation and legal matters pertaining to the automotive industryFocus On Investment - investment analysis of regional automotive related companiesAccounting & Finance - updates on accounting, tax, and customs changes pertaining to the automotive industry
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and then to the new factory in Gliwice.
Bridgestone’s Investment Registered
Bridgestone Firestone Poland —a jointventure between Bridgestone andStomil Poznan, Poland’s third-largesttire producer — was officially registeredin July. The company will start makingtires for passenger cars and deliveryvehicles in the year 2000. Bridgestoneholds 71% of the new company’s capitalof $63.2 million. The Polish partner’scontribution to the venture is a factory.“In 2000, we will be making 5,000 tiresper day, or 1.7 million per year,” saidJozef Stopa, president of Stomil Poznan.
Inter Groclin Auto Entering ParallelStock Exchange
Inter Groclin Auto of Wolsztyn,Poland, whose products include carseats, children’s car seats, and seatcovers intends to enter the WarsawStock Exchange’s parallel market.
The company produces parts for FiatAuto Poland, which accounted for32.4% of revenue last year. Accordingto company Chairman WojciechWitkowski, production of seat coveringsfor the Renault Twingo is set to beginsoon.
Inter Groclin intends to invest PZL 13.8million ($4 million) by the end of 1998.Last year’s sales amounted to nearly PZL47 million ($13.6 million), while netprofit stood at PZL 6.5 million ($1.88million). The company’s automotivemarket share is estimated to be 3% of thePolish sector. Zbigniew Drzymala, InterGroclin’s president, is the company’smain shareholder.
Best-known Brands in Poland: Fiat,Opel, and Mercedes
According to a survey of the automobilemarket carried out in April and May of1998, the best-known makes in Polandare Fiat, Opel, and Mercedes. Forty-twopercent of the people polled by theIndicator Marketing Research Centerrecognize the Fiat brand name, 37% -Opel, and 35% - Mercedes.
Polish Government Ready to LowerCustoms Duties on Cars
The Polish government is prepared to
lower the customs duty on large carsproduced outside the European Union inorder to regain trade preferences forPolish goods sold in the United States.According to the daily GazetaWyborcza, a declaration to this effectwas made in mid-July by Minister of theEconomy Janusz Steinhoff. Currently,the customs duty on cars from outsidethe EU is 35%, while the tariff for EUcars is 20%.
Citibank Placing Stomil OlsztynCommercial Paper
Citibank will place tire maker StomilOlsztyn’s commercial paper with a totalvalue of PZL 100 million ($29 million)on the Polish and international market.
Traffic Law Amendment Calls forNew Vehicle Number Plates
In mid-1999, every car registered inPoland will receive new number platespursuant to an amendment to the TrafficLaw. The reflective plates, modeled afterthose existing in Western Europe, will beproduced only by licensedmanufacturers.
Three manufacturing licenses areplanned to be issued. The high financialrequirements, including ECU 1.5 million($1.66 million) of company capital,practically eliminates from the race toobtain a license the current 50manufacturers of the old number plates.
Survey Says Drivers Want GasStations Close To Home
Gas-station owners will be interested inthe results of a survey carried out in late1997 by BPS Consultants Poland on asample of 1,800 people (not onlydrivers). The survey, published in mid-June, found that 46% of respondents saythe most important reason for choosing aparticular station is its proximity to theirhome. Sixteen-percent said thatconfidence in the station operator wasthe most important factor. The price offuel was deemed less important.
Among gas stations, CPN is still themost popular, though its share hasdecreased from 67% of those surveyed in1996 to 52% in 1997. In 1997, secondplace went to Statoil (8%), followed byRafineria Gdanska and private owners(7% each), and Petrochemia Plock,Shell, and Esso with 5% each.
Fiat Financing Company Opens InPoland
Fiat Bank Polska has begun operationsin Poland, its main product being aninstallment loan for Fiat Auto Polandcustomers. The bank’s founding capitalis PZL 33.25 million ($9.6 million), andthe stock capital is PZL 25 million. Thebank plans to provide loans for thepurchase of 20,000 cars per year.
Autoparts Set to Sell Parts Worth $72Million in ’98
Autoparts, distributor of spare parts forDaewoo cars, has spent $1.5 million onmodernization of its high-storagewarehouse. According to Autopartsestimates, this year sales of spare partswill hit PZL 250 million ($72 million).
New Car Sales Up 8.5% in Poland
During the first six months of 1998, newcar sales in Poland totaled 283,758 units,up 8.51% compared to sales during thesame period in 1997, according tofigures released bySAMAR .
Fiat sold 85,109 cars, capturing a29.99% market share. At this time lastyear, Fiat’s market share was 34.62%.The drop in market share is partly due toDaewoo’s strength in Poland. Daewoo’sfirst half sales hit 77,699 units, givingthe Korean company a market share of27.38%. Daewoo’s market share a yearago was 24.85%.
GM/Opel is the third best selling brandin Poland, with sales of 23,092 carsduring the first half, and a market shareof 8.14%.
Daewoo’s Tico model was the mostpopular make with sales of 24,817 units,closely followed by Daewoo’s Lanosmodel which saw first half sales reach23,023 units. Fiat’s Palio/Siena model isthe third best selling model with sales of21,880 units. And although its salesfigures are down over 23% compared tolast year, Fiat’s 126 model saw sales hit21,283 units, making it the fourth bestselling brand.
Fiat Chooses The Baan Company AsSupplier For Enterprise Software
In late July, the Baan Company N.V.announced an extended relationship with
Continued on Page 13
Highlights Continued from Page 2
© Central European Trade & Marketing, L.L.C. 1998 http://www.cear.com ™ CENTRAL EUROPE AUTOMOTIVE REPORT™ • September 1998 5
Plastic components produced byCentral European manufacturersrange from tiny plastic switches
and knobs, to car light housings, to fueltanks, to complete dashboards. Theregion is also home to many plasticinjection mold and die makers andmachinery producers.
Foreign producers of plasticautomotive parts discovered theadvantages of producing in CentralEurope many years ago. LorangerManufacturing Corp. came toHungary back in 1990 to search for asite to produce components made fromengineered plastics and metals forFord Hungaria. Loranger opened aplant in 1993 in Szekesfehervar,Hungary and now supplies Ford withcomponent parts for ignition coils andfuel pumps, and other metal and plasticcomponents for other majormultinational companies.
“[We have] good people and they’recost efficient at what they do,” saidGeorge Loranger, the company’s CEO.According to Loranger, his company isenjoying yearly sales growth rates of20-30%.
Even small companies are getting in onthe action. The US-based PlasticMolding Technology (PMT) has beenin Slovakia since 1991. “Not too manycompanies our size did what we didback in 1991,” said Todd Sholtis,PMT’s Vice President for EuropeanOperations.
PMT chose Slovakia because of thecountry’s tradition of plastic injectionmolding, the lower labor costs, andSlovakia’s strategic location.
“You can ship anywhere in Europenow from Slovakia,” said Sholtis.
Although robust, the plastic industry inCentral Europe is not withoutproblems. Local companies don’t have
presses with tonnage ranging from 40to 800 tons.
Czech Republic
Autopal — Lighting systemsmanufacturer owned by Ford. Amongother products, makes plasticheadlamps and other lights.
Kautex Textron Bohemia — US/German-owned producer of plasticcomponents for vehicles, including fueltanks and washer fluid reservoirs.
Peguform Bohemia — German-owned producer of plastic bumpers anddashboards. Skoda and Audi arecustomers.
Plastik HT — 31% German-ownedproducer of injection moldedcomponents for sale in the CzechRepublic, Slovakia, Belgium, andGermany.
TRW Carr — US-owned producer ofplastic injected components for theauto industry, 60% for export toGermany, Great Britain, Slovakia,Spain, and Brazil.
Hungary
Arge Kft — Plastic parts producerwith German partner, customersinclude Porsche, Mercedes, and Iveco.
Loranger Ipari Kft — US-ownedproducer of components made fromengineered plastics and metals.
Slovak Republic
Plastic Molding Technology — UScompany’s Slovak subsidiary PMTSlovakia designs and produces plasticinjection molds and dies. Esoplastjoint venture specializes in insert andinjection molding.
Sluzba V.D.I. — Slovak-ownedproducer of injected plastic partsn
Auto PlasticsRegional Special Report
capital to invest in the new equipmentthat is necessary to process highlyengineered materials. Many simply goout of business or must look for a jointventure partner.
In the mold and die industry, there’salso a shortage of qualified workers.“We’re short on technicians andtraining for technicians, like anapprenticeship program for moldmakers and plastic moldingtechnicians,” said PMT’s Sholtis.
Manufacturers also report that plasticinjection accessories can be difficult tofind in Central Europe.
Below are a few of the plastic partsand components producers inCentral Europe:
Poland
Hanyang ZAS Elblag — DaewooFSO joint venture that producesdashboard plates, headrests, heatercovers, glove compartment door,interior air inlet housing, windowwinders, wheel rim covers, and airintake grating.
Koram ZZM Poland — AnotherDaewoo joint venture that producesinjection molded plastic parts.Products include front and rear bumpercovers, dashboards, front and rear doorpanels, and air intake gratings. Out ofpolyurethane foam, the companyproduces profiles for the front and rearseats for the Lanos, Polonez, andLublin models.
Magneti Marelli Poland —Manufactures a range of plastic parts,including vehicle lights, instrumentpanels, rear view mirrors, and clocks.Fiat is the company’s main customer.Magneti’s factory has modernthermoplastic injection machinery(mono and 3-color), including 56
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More than a year ago, HermanRigelnik explained whySlovenian companies in the
vehicle industry should diversify intonew branches.
“We must think about changes that areexpected because of Slovenian entranceinto the European Union,” said Rigelnik,the general director of the Slovenian carimporter Autocommerce and the formerpresident of the Slovenian Parliament.“The solidity of our company will bebetter if we stand on two or three legs,not just on one.”
Later, events have proved that he was notjoking. Autocommerce is activelysearching beyond the car business fornew sources of profit. And other cardealers are following Autocommerce’slead, seeking business sectors that aremore hospitable than Slovenia’s fiercelycompetitive auto sales market.
Undoubtably, Autocommerce’sfoundation is its auto import business. In1995, the company enriched its autoportfolio with the acquisition of AutoMakar, a company that represented Fiat,Lancia, and Alfa Romeo. Today,Autocommerce’s company Avto Triglav(the renamed Auto Makar) handles thedistribution of Italian vehicles inSlovenia. Two other powerfulcompanies round out Autocommerce’sauto empire: AC-Intercar (generalrepresentative for Mercedes-Benz) andAC-Mobil (general importer for Hondavehicles).
Autocommerce also has its hand in thetire distribution business. In thebeginning of 1998, Autocommerce’s ACZastopstva became a representative forthe German tiremaker Continental.Continental had previously worked withthe Slovenian tiremaker Sava, untilGoodyear agreed last year to become amajority owner of Sava’s tire andengineered products business.
Looking Beyond the Auto Industry
Autocommerce’s first move outside theauto market was the purchase of amajority share of Elektrotehna Set at theend of 1996. With this move,Autocommerce entered the business ofelectrical consumer goods, such aswashing machines, televisions, andstereos.
And in the beginning of May 1998, thecompany acquired Konim, arepresentative for various products,including medical and pharmaceuticalproducts and air conditioners.
The company’s other target is tourism.“Tourism is interesting for us because ofthe profit we can get from it directly orindirectly,” said Rigelnik.
In the middle of 1997, Autocommercesucceeded in buying a controlling shareof Kompas Magistrat, formerly a part ofthe big tourist company Kompas.Kompas was broken apart into more than70 small companies, including KompasMagistrat, Kompas Turizem, andKompas Holidays, now the largest touristcompany in Slovenia.
Both Kompas Turizem and KompasHolidays were eyed by Autocommerceas acquisition targets, but thosecompanies had their own plans. Theyhad little enthusiasm forAutocommerce’s plans, especiallyKompas Turizem, who was moreinterested in reuniting the Kompascompanies.
Although Autocommerce’s attempt totake over Kompas Holidays has beenunsuccesful, it has purchased anundisclosed amount of Kompas Holidaysshares. “Yes, Autocommerce [owns]some of our shares, but not enough toprevent our decisions about mergers,”said Toma Visenjak, general manager ofKompas Holidays.
Undettered, last NovemberAutocommerce bought nearly half of the
shares of another Slovenian touristcompany Emona Globtour. And in earlyJuly of this year, Autocommerce boughtmore than 50% of Globtour Praha.
A year ago, Autocommerce’s Rigelniksaid that there is room for just onepowerful tourist company in Slovenia.He was convinced that it would dobusiness under the umbrella ofAutocommerce. It seems, however, thatthe directors of Kompas Turizem andKompas Holidays have a different idea.Or, perhaps, they are trying to achievebetter price.
Other Importers Shopping Around
Autocommerce is not the only companyin Slovenia’s auto import industrylooking for new business opportunities.Last year, Avtotehna — a representativefor Nissan, Opel, Mitsubishi, Iveco,Repro, Canon and various other brands— bought the vehicle remodelingcompany Riko Komunalna Oprema.
A1 — formerly known as AvtohisaLjubljana — is another powerful autocompany shopping around foropportunities. The company, whichowns several car sevice and tradecompanies, has not released any detailsabouts its plans to enter new sectors. Butthe company’s director Franc Jaksa saidlast year that their recipe is similar toAutocommerce’s — they are interestedin sectors with different business cycles.
“Our profit is even better than theaverage profit in the Slovenian autocommerce [business] — it will be hard toachieve higher [profits],” said Jaksa.“So, we would like to enter brancheswith different business cycles comparedto the car [business].”
Car importer Avtohisa Claas may havethe same goal. In June, the generalimporter and dealer for Peugeotpurchased the Kompas rent-a-carcompany Kompas Hertz, a companyfacing serious financial troubles as aresult of the bankruptcy of Komercialnabanka Triglav. Having helped KompasHertz avert its own bankruptcy, Avtohisais now a majority owner of the rentalcompany.
Goran Novkovic (Ljubljana)
Slovenian Vehicle ImportersConquering New Ground
Major Importer Eyes Tourism Business to Bolster Profits
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Segment YTD Sales (Units) Market Share (%)% Change Import Share % Change
1998 1997 1998 1997 1998 1997
1. Segment A 64,991 78,491 22.90 30.02 -17.20 0.002 0.414 -99.69
2. Segment B 57,601 64,731 20.30 24.75 -11.01 29.796 36.046 -26.44
3. Segment C 125,416 86,137 44.20 32.94 45.60 23.888 22.595 53.93
4. Segment C/D 29,050 28,063 10.24 10.73 3.52 56.682 71.136 -17.52
5. Segment D/E 3,497 1,219 1.23 0.47 186.87 65.285 93.273 100.79
6. Segment F 81 101 0.03 0.04 -19.80 100.00 100.00 0.00
7. Segment S 711 943 0.25 0.36 -24.60 100.00 100.00 0.00
8. Segment MPV 1,917 1,495 0.68 0.57 28.23 100.00 100.00 0.00
9. Segment 4WD 494 325 0.17 0.12 52.00 100.00 100.00 0.00
Total Passenger Cars 283,758 261,505 100.00 100.00 8.51 27.209 33.614 -12.17
10. Light Comm. Segment 11,756 13,748 49.05 53.08 -14.85 26.40 19.70 14.08
11. Medium Comm. Segment 12,212 12,152 50.95 46.92 0.49 20.64 19.07 8.76
Total Commercial Vehicles 23,968 25,900 100.00 100.00 -7.67 23.46 19.40 11.63
Source: SAMAR s.c.
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Polish Vehicle Market Segmentation (YTD June 1998)
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CENTRALEUROPEAUTOMOTIVEREPORT™
8 September 1998 • CENTRAL EUROPE AUTOMOTIVE REPORT™ http://www .cear.com ™ © Central European Trade & Marketing, L.L.C. 1998
I n our July Web Forum (http://www.cear.com), Rene Samek from CzechInvest listed severalfactors that he thought have made wheel maker Hayes Lemmerz (formerly Hayes Wheels) asuccessful investor in the Czech Republic.
Rene considered the following factors to be important:
“1. Long tradition of wheel manufacturing in Ostrava, dating to the inter-war period. Prior to 1993,wheels were manufactured in Nova Hut. In 1993, Hayes set up a joint venture with Nova Hut andsubsequently became the sole owner of the joint venture.
“2. Good availability of well-qualified labor due to the long industrial heritage in the Ostrava regiongenerally. Relatively high unemployment in the Ostrava region (6-7% in June 1998) has kept wages inthe region below the national average and production costs at a fraction of those in Western Europe.
“3. Strategic location of the plant in Central Europe and the Czech Republic’s well-developed transportinfrastructure have allowed the company to supply car manufacturers in several European countries.
“4. Being a supplier to Skoda presents two big advantages. First, Skoda’s output has risen very quickly since 1992, which benefitsevery Skoda supplier. Second, being a supplier to Skoda is a very good ‘recommendation’ and a good springboard to supply othercar manufacturers in the region, within or outside the Volkswagen group.”
To Rene’s list of important factors, I’ll add just a few additional traits that I’ve seen in other successful auto companies in CentralEurope:
1) Patience and Persistence. Some of the overnight success stories in Central Europe have been 5-7years in the making.
2) Excellent communication with workers. Setting goals together and keeping them informed aboutthe company’s strategy and reasons for certain actions.
3) Always looking for opportunities to expand business, even if a new activity is slightly outsidetheir traditional area of expertise.
4) Refusing to listen when the word “impossible” is uttered by others.
Tips For Success In Central Europe What Makes a Success a Success?
Jeff Jones
Visit the CEAR Central Europe Automotive Forum™ at http://www.cear.com/autoforum or click here CEAR.COM ™
Passenger Cars Light Commercial Vehicles Medium Commercial Vehicles
Make Units Change Make Units Change Make Units Change’98 v. ’97 ’98 v. ’97 ’98 v. ’97Units Units Units
Daewoo Lanos 23,023 23023 Citroen Berlingo 1,301 1010 Mercedes Vito 1,523 582Fiat Palio/Sienna 21,880 21799 Skoda Pick up 1,248 436 VW Transporter 1,045 493Daewoo Tico 24,817 6316 Fiat CC van 1,695 242 VW LT 270 219Daewoo Nubira 5,810 5810 Renault Kangoo Express 181 181 Kia Preggio 194 194Toyota Corolla 6,392 4906 Fiat Uno Van 633 68 Renault Master 279 169Fiat Seicento 3,612 3612 Peugeot 306 XA 64 55 Mercedes Sprinter 388 117Honda Civic 7,324 3111 FSO Polonez Cargo 190 28 Kia Ceres 331 104Opel Astra 13,882 2846 Peugeot 106XA 15 11 Peugeot Boxer 369 92Citroen Xsara 2,707 2707 LDV 145 68Toyota Avensis 2,263 2263 Iveco Daily 430 34
Source: SAMAR, s.c.
Fastest Sales Climbers in Poland (YTD June 1998)
© Central European Trade & Marketing, L.L.C. 1998 http://www.cear.com ™ CENTRAL EUROPE AUTOMOTIVE REPORT™ • September 1998 9
Intellectual capital is one of the mostimportant and sustainable sources ofcompetitive advantage for today’smodern companies — IC is simply thedriver of future earnings. Mostcompanies, however, don’t even knowhow to measure their IC. Based on therecent articles on the fundamentals of IC,this month Dr. Roos will explain andillustrate how companies can developand use an IC-index.
The IC approach I discussed in my lastarticle mirrors how value is created inyour unit or business. The categories ofIC, for instance, human capital andrelationship capital represent your usablestock of IC. At this stage you have apretty good feeling for what IC isimportant in your particular business andsituation and, therefore, what to measureeven more carefully and systematically.
So far, so good, but we still have notidentified a way to benchmark IC scoresagainst the competition. And because ICis inherently business-specific, you can’tcompare one unit’s scores with another,unless all units have come up withidentical measures, which is unlikelysimply because your starting point – theunique strategy and business context ofbusiness units.
The Next Step in IC Practices
This leads us to the next natural step inIC practices: developing a simple yetrobust IC index. The purpose of such anindex is to focus on IC growth or declinerather than the absolute score. Indiceshave an inherent characteristics that youcan take advantage of in this attempt toquantify what is difficult to measureaccurately, namely that is capturechanges.
Changes, as such, are a universalcurrency, like money. Armed with an ICindex, management can easily see theemerging effects of tradeoff decisionsand quickly take corrective action toensure that future earnings capabilitiesare not damaged. Companies are alreadymoving this way. Skandia launched anIC-index in their most fast-growingbusiness in 1997. Many otherscompanies are rapidly applying a robustIC-index approach that I have been co-
developing with ICS of London (seeBusiness Intelligence’s May 1998 reporton Knowledge Management).
The Making of an IC-Index
How do you create such an IC index? Isuggest a three-step approach that willhelp you refine your IC thinking andsystem and provide you with a usablemeasure of changes in IC growth ordecline.
First, critically review the IC indicatorsyou have chosen. Some managementteams have no problem coming up with along list of indicators. Recently, Iencountered a company working with286 non-financial measures. Whetherthese indicators capture usefulinformation is another question! Askyourself: What is really important here?Can your key success factors be phrasedin a more precise way? How are yourindicators put together?
Ensure that each indicator has a “story”to tell. If indicator x increases…whatdoes that mean? This is a simple yetchallenging acid test of indicator quality.Just ensure that you can defend theseindicators. What do they really mean? Isit always good if the value increases? Ioften encounter indicators based more onhunches than robust theory. If there is nostory or if it is weak, drop the indicator.
Second, add what I call “flowindicators,” which provide insight intothe transformation of one IC categoryinto another. The flows among IC stocks,e.g., from human capital to businessprocess capital, and between IC stocksand revenue represent how well youutilize the stocks of IC you haveidentified as important.
Most organizations take a balance sheetapproach to IC, like I outlined in my lastarticle. This is also the nature of the well-known Balanced Scorecard Approach.This can be useful, but it provides only asnapshot view of the organization.Development projects may turn out to beuseless, and investments in IT may notlead to the anticipated result.
A complementary “income statement”approach to IC requires indicators for
flows among categories — for example,to measure the flow from human capitalto other forms of IC that are owned bythe company. By adding flow indicatorsthe quality of your “theory of thebusiness” improves dramatically. It iscommon sense but not common practiceto complement your thinking of ICstocks with how well you utilize them(read: IC flows)…
At this stage you are ready for the thirdstep, to develop sub-indexes for eachcategory of IC (like a human capitalindex), each IC flow (like human capitalto business process capital index), aswell as an aggregated IC-index. Thisinvolves assessing the relativeimportance of indicators for each form ofIC and the relative importance of eachform of IC within the aggregate ICindex.
There are no rules for which ICindicators and categories should havewhich weight. You must determine whatis appropriate for your industry,company, and strategy. Yet, my advice isto consult people (experts) on yourbusiness inside and outside yourimmediate organization on the relativeimportance of your IC categories and ICflows.
The Use of an IC-Index
What is the use of an IC index? First, anIC index is a way to consolidate themany measures of IC into a single, or ahandful of measures. As a manager, youneed a few good measures, not 286indicators. The IC index approach willenable you to discuss the bigger picture,similar to how you typically just focus ona few financial efficiency measures, likeROA or ROS.
Second, an IC index also allows forsystematic benchmarking of the future-oriented measures that we have called ICstocks and IC flows. By focusing onchanges in IC you can see what happenswhen your attention and that of theorganization gets oriented in onedirection. Since human attention is trulylimited, we all make conscious orunconscious trade-off decisions.
In one real example, top-managementurged the organization to focus oncustomer satisfaction improvements.And this was indeed improved, as werethe innovations made. Yet, after a while
Managing for ExcellenceFacing the Intellectual Capital Challenge — Part IIIDr. Johan Roos, Professor of General Management and Strategy, International Institute forManagement Development
Continued on Page 16
10 September 1998 • CENTRAL EUROPE AUTOMOTIVE REPORT™ http://www .cear.com ™ © Central European Trade & Marketing, L.L.C. 1998
Recent trends show that the focusof the Hungarian automotiveindustry will shift from car
assembly to parts production.
When GM and Suzuki came to Hungarywith their car assembly operations, thenational markets of the Central &Eastern European (C&EE) countrieswere protected by high custom tariffs.Because of these trade barriers, OEMsfound small-scale production profitableeven in such a small country as Hungary(in 1997, new car sales figures inHungary were around 75,000, while478,000 were sold in Poland).
These trade barriers have been graduallyabolished by trade agreements (CEFTAand EU) and OEMs responded byeconomizing their production.Furthermore, the over-capacity problemsand globalization trends of the OEMsalso facilitated the changes in theHungarian automotive industry.
GM decided to centralize its C&EE carassembly in Poland and Suzuki willincrease its production volume. Suzukiwill most probably continue car
assembly in Hungary for the long termbecause the Hungarian plant is crucialfor Suzuki’s European presence. GMand Suzuki also teamed up for jointproduction of a small car model.
While the globalization of theautomotive industry hurt car assemblyoperations in Hungary, the auto part andcomponent industry will benefit fromthis trend. As OEMs start to offer thesame models (with the same parts builtinto the car) in all markets regardless oftheir geographical location, suppliers cantake advantage of the increasedeconomies of scale.
In addition to this trend, suppliers facefierce competition as OEMs look tominimize their supplier base to maintainprofitability. Demand for cars in Asiahas dropped significantly and OEMs arefaced with over-capacity problems. Inthis increasingly competitiveenvironment, Hungarian parts producerscan even better utilize their costadvantage over their Westerncompetitors.
OEMs are also bringing parts production
to Hungary, as the limited potential ofthe domestic car market does nothandicap parts production. Audi set upan engine plant in Hungary and aims toproduce all engines it needs in Hungary.GM also announced that it will set upproduction of gearshifts in Hungary. Thelocal presence of key componentproducers to OEMs also facilitates thedevelopment of the parts productionindustry of the country.
Looking at other segments of the vehicleindustry, the Hungarian truck industryseems to have suffered a similar fate asthat of the Hungarian automotiveindustry, while the Hungarian busindustry seems to be the only segment ofthe vehicle industry that will continue toproduce the “end product”.
All in all, I believe that the Hungarianvehicle division will specialize mainly inparts production in the long run.However, there might exist exceptionssuch as Audi who assembles its newsports coupe in Hungary, or NABI whoseems to have a solid future in the USbus market.
To read more of Andras’s comments onthe Hungarian auto sector, check out theCEAR.COM Central Europe AutomotiveForum at http://www.cear.com
Opinion MakersWood & Co. Analyst Sees Rise in Parts Production in Hungary
Andras Nemeth, Analyst, Wood & Co., Budapest Office
Will the investment climate in theCzech Republic auto sector bechanged — for better or worse — bythe recent elections?
“I expect the investment climate tochange for the better. The interimTosovsky government was far more proprivatization and FDI than the Klausgovernment in both words and actions.The Zeman government looks like it willcontinue the Tosovsky government’sprivatization activities.
“Publicly, they are also more positive onthe benefits of FDI. In practice this may,at some point in the future, lead toimprovements in the incentives packageannounced by the Tosovsky government
in April this year. CzechInvest islobbying to reduce the USD 25mnqualification limit but it is simply tooearly to say if, or to what level, it will bechanged, and when.
“I also expect the new government todevote more attention and resources toregional policy and to active employmentpolicies. As Czech regional policydevelops one can expect to see itbecoming more beneficial to locate incertain areas. North Moravia and CentralMoravia are prime areas for the autosector: close to Polish plants in Silesia,plentiful skilled labor (particularlyaround Olomouc/Prerov), good trackrecord in the sector by foreign firms, newindustrial sites being developed(Karvina), [and] good motorway
connections to Austria and Germany.
“This, in conjunction with the recently-approved investment incentives scheme,will encourage more investors to choosethe Czech Republic for their nextEuropean investment.”
Rene Samek is the Deputy Director ofMarketing and PR with CzechInvest, theCzech government agency for thepromotion and facilitation of foreigndirect investment. More comments fromRene can be found on the CEAR.COMCentral Europe Automotive Forum athttp://www.cear.com
New Czech Government: Good for AutoSector Investment?
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© Central European Trade & Marketing, L.L.C. 1998 http://www.cear.com ™ CENTRAL EUROPE AUTOMOTIVE REPORT™ • September 1998 11
In order to fulfil the expectations of theircustomers, the supply base expectationsmay be summarized in one word —partnership. The manner in whichcustomer/supplier relationships shouldbe developed are listed below:
12 Steps to World Class Total Quality
1. Basic quality systems requirementsin place.
2. Management ownership of andcommitment to comply withsystems, without exception.
3. Management ownership of,understanding of, and commitmentto never ending improvement.
4. Management leadership inimprovement actions throughdisciplined problem solvingtechniques.
5. Awareness, education, and trainingfor all in basic improvement toolsand techniques.
6. Specialist training in “advanced”tools and techniques by linemanagement and other specialists.
7. Advanced Quality Planning,optimization of product and processdesign, and manufacture withstatistical controls in place — tocreate a preventative environment.
8. Management understanding ofWorld Class ManufacturingPrinciples and Benchmarking(including mistake proofing andQuality Function Deployment).
9. Management leadership to WorldClass Manufacturing Principle bycontrolled pilot scheme to achievesuperior Benchmark.
10. Awareness Education and Trainingfor all in World Class ManufacturingPrinciples.
11. Employee led improvement actions.12. Zero defects, Zero equipment
downtime, Zero stocks and lead timefor manufacturing, Zero lostpersonnel time, Maximized numberof improvement idea proposals tosustain superior Benchmark inprocesses and products, throughsuperior people.
Meeting the Expectations of theGlobal Automotive Industry —Summary
In order to meet the expectations of theglobal automotive industry, organizationsmust in many cases go through atransformation from the characteristicsthat are associated from mediocritytowards mastery.
This paradigm is particularly pertinent to“Managerial Learning” in order tosupport the development of corecompetencies within its organizationwhich it must have in place in order tomeet both the basic requirements andexpectations of its customers.
Mediocrity is the result of UnconsciousIncompetence (i.e. being satisfied withthe status quo — “I don’t know what Idon’t know”). Conscious Incompetence— “I know what I don’t know” — leadsto awareness and the commencement ofthe transformation process to realize fullpotential.
Conscious Competence brings acommitment towards self-effectivenessand the ability to be able to respond toorganizational needs, “I know what Iknow.” Mastery (of self, and ability todevelop others) comes form unconsciouscompetence — I automatically do what Iknow — and I can develop thiscompetence in others.
Management theories have progressedfrom:
Theory X: Experts plan, operators do asthey are told; toTheory Y: Listen to your people, theyare intelligent and earnest; toTheory T: Training provides the toolsfor continual employee-drivenimprovement. No training, littleimprovement; toTheory C: Competencies provide thebehavioral characteristics for leadershiptowards superior performance. Nocompetencies, no sustained World Classperformance.
As Dr. Deming used to state regularly:
“Do you know that doing your best isnot good enough? You have to knowwhat to do — then do your best.”
Aspiring World Class suppliers to theGlobal Automotive Industry must bothfind out what the industry expectationsare and develop competencies in how toachieve and sustain the expectationsn
Quality in Action
VDO Instrument’s quality system in theCzech Republic includes defining qualitytargets with employees and keeping theemployee informed about the targets andcurrent quality status.
Supply Base ExpectationsBuilding Supplier Quality: Lesson 5With Ray Barker, Group Director, Business Excellence Strategy, Avon Rubber
Customer/Supplier Relationships
ELEMENT ADVERSERIAL PARTNERSHIPTenure Brief Long-term, stable common business strategyType of Agreement Sporadic; purchase orders Exclusive life-time contracts, one year or moreNumber of Sources Several per item for protection and 1 or a few good ones per item or family of items
price competitionVolume of Business Limited per supplier High; supplier may dedicate small plant to one customerPrices/Costs High on average High; supplier may dedicate small plant to one customerQuality Uncertain; rely on receiving inspection Quality at source; supplier used total quality approachOrder frequency, size Infrequent, to stores requirements Frequent, to build requirementsOrder conveyance Mail Contracts plus Kanban, Electronic Data InterchangeDelivery To dock/stockroom To production lineReceiving Information Packing lists, invoices, No count inspection; payment on sale
count/inspection formsOpenness Very little Joint design, 2-way visits, on site auditsAssembly/Use Defined by customer Supplier technical input and responsibility for fit and functionService/Aftermarket Little interest Dealer and ultimate customer training/awareness
12 September 1998 • CENTRAL EUROPE AUTOMOTIVE REPORT™ http://www .cear.com ™ © Central European Trade & Marketing, L.L.C. 1998
valves, which we already have, to alsohave engine bearings. [We’re] trying tocombine everything into one distributionpoint to give the customer the chance toorder a number of goods from onecompany.
CEAR: What do your distributorgrowth rates look like?Staniszewski: In Poland, we’re up 35%compared to sales last year. We’veopened [some] new markets, [such as]Hungary, Romania, Bulgaria, Latvia, andEstonia, so those markets are alreadyselling our product. We’re 70% higherin sales in Lithuania compared to lastyear. I’ve got more distributors in theCzech Republic. In general, turnover isup about 40%.
CEAR: Do any of the markets inCentral Europe require specialtreatment or approaches?Staniszewski: Not at all. All themarkets are currently price oriented. Thecar parks, in general, are fairly similar,with a small different emphasis in somecountries. For instance, there are moreRenaults in Slovenia and Slovakia, andmore VWs and Ladas in Hungary. Ingeneral, the special price lists that I havefor the fast movers, [such as] the VW1.6 diesel, could be, with a fewexceptions, accepted almost anywhere.
CEAR: What are some of the keyaftermarket trends you see in CentralEurope?Staniszewski: There’s definitely goingto be a consolidation trend in this market.Importers and distributors will join inorder to extend their customer base, tostrengthen their financial power andpurchasing power. And because of theirbigger size they will ask for biggercredits.
In general, the [customer] awareness ofthe market is not as strong as in Westerncountries. The most valuable assets inthe western markets are the [focus] onthe customer, on the service, onmaintaining the customer. It’s not asuccess to sell once to a customer. Thesuccess starts growing when thiscustomer comes back to us.
And in Poland, the trend is that, slowly,people are realizing [that] fighting eachother with price dumping is not the rightway. It’s the customer. How happy heis. How well serviced he is. How manytimes he comes back. How well you cantake care of him. So that’s definitely one
I’m looking at importers and distributors[who operate on a] country level.
We’re focusing more on a country bycountry [basis] and in some countries,like Poland, county by county, region byregion. And then we try to create anetwork to prevent our products fromcolliding with [each other].
We’re enlarging and extending our linesand references [according to] marketneeds. Currently, we’re working on thepiston and ring range extensions. It willbe customized to each market.Obviously, references which are popularin East Africa aren’t necessarily popularin the Slovak Republic or Estonia. Eachof our markets has its needs and ownspecial requirements.
CEAR: Are you only targeting theaftermarket in Central Europe?Staniszewski: For all Eastern bloccountries, it’s 100% aftermarket rightnow. That’s what we’re focused on. Butwe’ve also extended [our] originalequipment range due to the purchase ofthe Sealed Power unit. That gives usMercedes, VW, BMW, Deutz,Caterpillar, and Ferrari as OEcustomers. So, obviously, that gives us avery strong back up.
CEAR: What’s the strategy behindyour new ad campaign?Staniszewski: The campaign is topromote a new image, a new graphicdesign. We’ve [kept] part of our logo,the “Doctor of Motors” [emblem],because it has been with us for more than100 years, but we’ve [adopted] thecorporate image of Dana. All thedivisions have the same graphics withdifferent colors. So we happen to havered which suits very much the [Polish]market. Victor Reinz has blue. Wix-Filtron has yellow. We’re trying topromote this new design.
The main emphasis [for advertising] isPoland, Czech Republic, and Slovakia.
CEAR: You still receive supplies fromFrance. Any plans to set upwarehousing in Central Europe?Staniszewski: At this moment, there areno plans to do that. What we’re workingon now is to provide good service to thecustomer and extend our range to have awhole complete package. This meansbesides pistons, rings, gaskets, and
of the trends.
Another trend I’ve observed is loweringstocks and speeding up deliveries inorder to [reduce] stock costs. And moredemands for CIP transportation. Goodsmust be delivered to the destination [atthe expense of] the seller. In general, ourpolicy was to have works prices —prices at the gate of the factory. WithCIP, the market is becoming moredemanding. So we have to provide themwith better service.
We deliver [our goods] to main freightspots, usually in Germany, where ourEastern European customers can collectour goods without having to go to Franceand passing [through] another border.The customers are asking for it.
CEAR: Any other trends?Staniszewski: The car park is definitelygetting much younger. Now, the mostpopular cars are late 1980’s and early1990’s [models]. Even up to 1993 and1995 [models]. In Latvia and Lithuaniathe car park has drastically improved.
The Lada is still there, but percentage-wise most all of the Ladas are beingdriven in Russia and Ukraine. It’s still agood seller, but it’s dying. We got verywell adapted to Lada needs and we’vegot very competitive prices for Lada.We managed to open up the Russianmarket and we sell references for Ladaquite well.
The old car park suits us because that’swhere we can sell. Not too old, butolder. In general, the whole car park hasdefinitely gotten younger.
There’s [also] a trend that all the mainproducers like us are going bythemselves and [supplying the marketdirectly]. That’s a way of controlling themarket, [staying on top of] what’s goingon.
CEAR: What is one of the mostattractive aftermarket segments inCentral & Eastern Europe?Staniszewski: I will be trying to put anemphasis now on the growing section ofthe market — heavy duty vehicles.People’s awareness of the HDV marketis [increasing]. This market is definitelya much bigger market, much better, andmuch more profitable market for all ofus. So, I would like to work onextending our network and getting more
Profile Continued from Page 1
Continued on Page 16
© Central European Trade & Marketing, L.L.C. 1998 http://www.cear.com ™ CENTRAL EUROPE AUTOMOTIVE REPORT™ • September 1998 13
Fiat Auto. Fiat has chosen Baan’ssoftware as the enterprise resourceplanning (ERP) tool to addressglobalization issues at Fiat Auto.BaanERP will also be used to support thestart of new operations such as in Russia,India, and South America, and to covercommon processes in the global market,such as the World Material Flowapplication used today in Italy, Turkey,Poland, and South America.
Czech Republic
SDC Buys Czech Truck Maker Tatra
On July 22, 1998, the US company SDCInternational, Inc. announced thesigning of two agreements that providefor SDC’s acquisition of the Czech truckmanufacturer, Tatra, a.s.
SDC has executed an agreement for theacquisition of 43.5% of the outstandingshares of Tatra from the Czechengineering giant Skoda, a.s. A secondagreement with the Czech commercialbank Komercni Banka, provides forSDC’s discounted acquisition of thebank’s senior secured CZK 2.8 billion($90 million) loan to Tatra. SDC willpay $30 million for the senior securedloan.
The closing of SDC’s acquisition ofTatra stock and senior debt is scheduledfor September 30th, pending appropriatedue diligence reviews and financingmatters.
According to Tatra’s consolidated auditreport certified by Ernst & Young ,Tatra’s revenues for 1997 were about$290 million, with $230 million inassets. Profits in 1997 were $2 millionand hit $2 million for the first quarter of1998. Tatra employs over 7,500employees.
“The most exciting aspect of theacquisition is working with Tatra to helpthem take advantage of the company’svast earnings potential by managing andmarketing improvements and by theinjection of capital,” said SDC ChairmanRonald A. Adams.
“Despite the ‘handcuffs’ caused byformer state ownership and capitalrestrictions, Tatra, after serious losses inprior years, seems to have turned thecorner.”
SDC plans to increase earnings per shareby infusing capital for raw material andcomponent inventories. New marketingand sales programs, along with Tatra’sfirst-ever leasing program will beintroduced to modernize and revitalizethe company. The Tatra labor union’srecent approval to reduce the workforceby 20% will also provide a substantialincrease in earnings.
If SDC fully converts the bank debts ofTatra into equity, Tatra would have abook value of about US $100 million, ofwhich SDC could have up to 84% of theoutstanding shares.
SDC is a publicly owned companyestablished to market, sell, and financeEastern and Central European industrialproducts such as diesel generators,cogeneration equipment, on-road andoff-road trucks, tractors, and othertransport equipment.
Foundation Stone Laid For $40Million Skoda Parts Center
On July 16, 1998, Skoda Auto laid thefoundation stone for a new centralwarehouse in Mlada Boleslav, CzechRepublic. The parts center, costing CZK1.3 billion ($40 million), will supplyspare parts to 320 authorized dealers inthe Czech Republic and Slovakia, as wellas to worldwide Skoda importers. Thecenter will also supply spare parts forCzech dealers of the Volkswagen Groupcompanies VW , Audi , and Seat.
“Extending production and sales ofSkoda automobiles in the next year to500,000 cars per year necessitates asubstantial extension of customerservices in Czechia as well as,increasingly, in markets abroad,” saidDetlef Wittig, Deputy Chairman of theSkoda board.
According to Skoda, its new parts centerwill be the largest and most modernspare parts warehouse in the CzechRepublic, with a 40,000 sq. meter floorarea and state-of-the-art computing andhandling equipment.
Volkswagen Producing Again InSarajevo
In July, Volkswagen AG signed anagreement with the Bosnian UNISHolding Co. to form a joint-venture thatwill assemble Skoda cars in Sarajevo, the
capital of Bosnia-Herzegovina.Volkswagen Sarajevo Co., is expectedto start manufacturing Skoda’s Feliciamodel in late July.
According to VW, it will hold a 58%stake in the joint venture, with UNISHolding owning the remaining 42% ofthe shares. Using parts supplied bySkoda in the Czech Republic, severalhundred Felicia models are expected tobe assembled this year. VW Sarajevothen plans to gradually raise productionto 5,000-10,000 cars and, after the year2000, up to 35,000 cars annually. Thecompany will employ up to 1,200workers, with Bosnian workers alreadybeing trained at Skoda in the CzechRepublic.
Parts for VW Group companies will alsobe manufactured in Sarajevo. VW willinitiate the process of qualifying theBosnian supplier industry for theproduction and delivery of componentsfor VW Group companies.
From 1972 to 1992, TAS (TvornicaAutomobila Sarajevo), the formerVolkswagen-Unis joint venture,produced a total of 350,000 VolkswagenGolf, Caddy, and Jetta cars andmanufactured rear axles and cablebundles for VW Group companies.Production was stopped in April 1992,after the armed conflict broke out inBosnia.
The new cooperation agreement wassigned by Dr. Jens Neumann, Member ofthe VW Group Board and Lothar Sander,member of the VW Brand Board, TvrtkoNevjestic, Chairman of the UnisSupervisory Board, and FarukSmailbegovic, Unis Managing Director.
Showa Aluminum Plant ConstructionUnderway
Showa Aluminum Corporation, theJapanese producer of aluminumproducts, has started the second phase ofconstruction at its car components plantnear Prague. In June, a “Topping-Up”ceremony was attended by the Ministerof Trade and Industry, Mr. Karel Kühnland Japan’s ambassador to the CzechRepublic, Mr. Shunji Maruyama.
In 1997, Showa selected the CzechRepublic as the site for its first Europeanmanufacturing facility dedicated toautomotive parts. Showa Aluminum
Highlights Continued from Page 4
Continued on Page 18
14 September 1998 • CENTRAL EUROPE AUTOMOTIVE REPORT™ http://www .cear.com ™ © Central European Trade & Marketing, L.L.C. 1998
The low labor rates in CentralEurope catch the eye of manymanufacturers. With labor rates in
the region running from 1/5 to 1/10 ofthe rates in Western Europe, the laborcost savings for auto manufacturers andsuppliers are obvious.
But more and more manufacturers inCentral Europe are seeing the benefits ofconducting sophisticated engineeringactivities in Central Europe, such asdesign and research & developmentfunctions.
“There’s more cost savings [obtainable]from engineering design [work],” saidone foreign component manufacturerbased in Hungary. “I see more of thathappening down the road.” According tothe manufacturer, the engineering skillshe sees in Hungary are encouraging andcan be developed. “It just takes time,”he added.
Daewoo Uses Polish & CzechEngineering Skills
Daewoo Motor Polska is takingadvantage of Poland’s engineering base.The company uses a 300-engineer strongresearch and development center inLublin, Poland. The center, establishedback in 1972, is focused primarily onimproving the quality of the Lublin IIvehicle and cooperates with the DaewooWorthing Technical Center in the UKand a Daewoo research center inMunich, Germany, according tocompany spokesperson Beata Stopyra.
Daewoo is also harnessing Polishengineering skills for its new generationLD-100 delivery vehicles. In April ofthis year, the cornerstone for thecompany’s new factory for the vehicle
was laid in Lublin.
Although the technical documentationfor the LD-100 was prepared at theWorthing Technical Center, the team ofengineers, designers, and managersincluded engineers from Poland, 20 ofwhom work permanently in Englandwith English and Korean engineers.Another 100 Polish engineers will beinvolved in the project over the next twoyears, mainly working on prototypes,said Ms. Stopyra.
In the Czech Republic, Daewoo Aviaengineers are involved in thedevelopment of the company’s new truckmodels.
“We are responsible for the development[of the new AD 100 truck] project as awhole within Daewoo,” said companyspokesman Jiri Kyncl. “In addition, ourengineers are responsible for the chassis,including the powertrain.”
Some testing of the 18 AD 100prototypes is taking place in the CzechRepublic, including road testing and trialtrack testing. The cab of the AD 100,however, was developed at the DaewooWorthing Technical Center.
VW Looks to Czech & PolishEngineers for Design
VW’s Skoda unit is beefing up itsengineering capabilities in the CzechRepublic. In December of 1997, thecompany laid the foundation stone for anew $6 million engineering center inMlada Boleslav. The new center,expected to open in the Spring of 1999,will provide workplaces totaling 3,800sq.m. for 160 engineers and designerswho will work on current and new Skoda
models. In particular, new bodies andSkoda engines will be developed at thecenter.
Volkswagen reportedly will design seatsin Poland through its Sitech joint venturewith Karosseriewerke Dresden GmbH.Sitech is expected to start production inMarch 1999 in the Legnica SpecialEconomic Zone. Seats designed andproduced at the plant will be supplied toVW Group companies.
Czech Center Offers R&D & Testing
UVMV , based in the Czech Republic,provides research and developmentservices and testing for automotivecompanies. “Our main business ispassive safety testing and development,”said UVMV director Vladimir Volak.
The center also has expertise in enginedesign, but this business has waned withthe demise of its main customers Liazand Tatra . “We’re not too active here,but we’re still equipped,” said Volak.The center is currently cooperating withSkoda on the design of cylinder headsand blocks. Volak also added that thecenter hopes to work with Daewoo Aviaon a project to make cylinder headchanges for Avia trucks.
Delphi Considers Polish Design Center
Delphi Automotive Systems isconsidering setting up a technical centerin Poland that would handle engineeringwork. “We’re thinking about anengineering center in Krakow,” saidDelphi Poland’s spokesperson EllaMorrison. “There is a possibility, butwe’re not sure yet. It’s in our lawyers’hands.”
If opened, the engineering center wouldprimarily handle work for DelphiChassis. In the past, Delphi has workedwith the Bosmal technical center inPoland on several engineering projectsn
Auto EngineeringMoving into Central Europe
Vehicle Category (ECE) Import Total Used Vehicle Imports Used Vehicle %Cars (M1) 207,485 129,926 62.62%Vans & Trucks (N1+N2+N3) 17,763 2,540 14.30%—Road Tractors 2,214 736 33.24%Motorcycles & Mopeds (L) 15,630 8,095 51.79%Buses (M2 & M3) 362 128 35.36%Coupled Vehicles (O1+O2+O3+O4) 8,554 2,594 30.32%TOTAL IMPORTS 249,794 143,283 57.36%
Source: SAP
Czech Republic Used Vehicle Imports (1997)
© Central European Trade & Marketing, L.L.C. 1998 http://www.cear.com ™ CENTRAL EUROPE AUTOMOTIVE REPORT™ • September 1998 15
Protocol to the Double Taxation Treatybetween Czechoslovakia and TheKingdom of Netherlands
The Ministry of Finance announced thaton 1st April 1997 the Protocol amendingthe double tax treaty came into force.The Protocol will be applied to the taxyears and periods beginning 1st January1998. The most significant amendmentcontained in the text of the protocol is thefact that a permanent establishment canbe created based on the existence of abuilding site or a construction orinstallation project that lasts longer thantwelve months.
Announcement Regarding DoubleTaxation Treaties
The Ministry of Finance published a newlist of double taxation treaties includingthe Czech Republic as a party (accordingto the situation as of January 1, 1998).As of January 1, 1998 the CzechRepublic had a treaty network of 49double taxation treaties.
Decree D-168 Regarding theApplication of VAT to InternationalTransportation
This detailed Decree explains the termscontained in Section 47 of the VAT ACTwhich deals with the VAT treatment ofinternational transportation activities.This Decree replaces, as of the date of itsissuance, the older decrees D-57 and D-58.Decree D-171 Further Explanation ofWhat is Subject to VAT
The Decree further describes what issubject to VAT. The term “taxablesupply” and what should not beconsidered as taxable supplies is furtherdefined following the amendment to theVAT Act which became effective January1, 1998.
Decree D-174 Method of AnnualAccounting of Prepayments in theCase of International Leasing ofLabor Forces
The Decree stipulates the method ofaccounting for annual prepayments oftax due on income from dependentactivities in the case of employees leasedby non-residents to domestic employers(principal of economics employer) andwhose personal income is determined
under the Income Tax Act and Decree D-151.
Decree D-172 The ApplicableExchange Rate for a Taxable SupplyOriginally Denominated in a ForeignCurrency
The Decree stipulates that a payer isobliged to translate the amount of ataxable supply denominated in a foreigncurrency into Czech currency based onthe exchange rate stipulated by the CzechNational Bank as of the date of the taxliability.
The New Amendment to the IncomeTax Act - Valid for 1998
An amendment to the Income Tax Actwas enacted on May 22, 1998 by theParliament and is effective as of January1, 1998. The amendment which is stillsubject to approval of the Senateintroduces the following changes:
Thin Capitalization Rules withRespect to Loans Granted fromAbroad were Abolished
This change has long been expected.Interest derived from loans granted bynon-related foreign parties (includingCzech branches of foreign banks) is no
Tax Changes in the Czech RepublicJan Zurek, Partner, KPMG Prague
Executive Summary:
• New Companies Act is clearer,better arranged, and lesscomplicated
• All existing companies mustbring articles and businessoperation into compliance withnew provisions
• Piercing of the corporate veilallowed in case of misuse oflimited liability
• Minimum amount of theregistered capital for limitedliability companies andshareholding companies raised
• Corporate minority rightsextended to all forms ofbusiness association
• New legal institution — the “pre-company”
Undoubtedly, the most important news is
that the new Companies Act took effecton June 16, 1998, replacing the oldCompanies Act of 1988. The new
Companies eliminatescontradictions, attemptsto fill legal hiatuses,and endeavors to boostHungary’s aspiration tojoin the EuropeanUnion by adjusting theHungarian legal systemto that of the EuropeanUnion.
The structure of thenew Companies Act isclearer, betterarranged, and less
complicated, while still upholding theoriginal principles of corporate law —protection of creditors, investors,(corporate) minorities, and promotion ofpublicity.
Some of the most important generalchanges to the new Companies Actinclude:
—a new possibility for the performanceof non-profit activities;
—the introduction of a new legalinstitution, the “pre-company”, whichmay operate with certain restrictionsfrom the conclusion of the articles ofassociation until the registration of thecompany, but the business associationcomes into existence upon beingregistered; and
—the improvement of (corporate)minority rights by extending theprotection of minority rights to all formsof business association and by allowingexclusion of members of businessassociations only upon a court resolutionbased on a lawsuit brought by thecompany upon such decision of thesupreme organ of the company.
An important new feature of the new
Legal AdvisorDr. Peter G. Nagy & Dr. Tamas I. Kovacs, associate attorneys, Hogan & HartsonL.L.P., Budapest Office
Continued on Page 16
Continued on Page 20
Tamas Kovacs
16 September 1998 • CENTRAL EUROPE AUTOMOTIVE REPORT™ http://www .cear.com ™ © Central European Trade & Marketing, L.L.C. 1998
certain ways of doing things deteriorated,and for various reasons some people left.
Thus, despite a healthy growth, showedby a rising IC index, clear trade-offdecisions were made throughout theorganization. By depicting the mostimportant aspects of IC, in this case onlythe IC stocks, management could morequickly take corrective action.
Third, an IC index allows comparisonson both business unit and corporatelevels. As previously stressed, changes inIC are a universal language. If it is ofinterest to benchmark IC developmentamong units the IC index makes thispossible. This benefit is mostly ofinterest to corporate managers.
Developed correctly, an IC index is anunprecedented tool that can help you toshed light on critical developments inyour capability to generate revenuetomorrow. As many corporations havefound, it is natural next step in thedevelopment of IC management theoryand practice. The approach synthesizesconcepts and practices from strategy,non-financial measurement finance, andmanagement value added.
I am involved in developing a practicaland useful CD-ROM tool for managersthat want to develop an IC system intheir unit, including the IC-indexapproach discussed in this article.Interested readers should look atwww.anticipator.com in Octobern
Excellence Continued from Page 9
distribution points, especially for HDVsin all of my Eastern European countries.
CEAR: Why is the HDV market sostrong?Staniszewski: Definitely, new trucksare being purchased, but it’s also thehuge increase in transportation activity.The [growing] number of transportationfirms, the amount of interest in worldtransport, and the general emphasis onimproving the roads. And those truckshave to be repaired and looked after.They’re working horses, so they have tobe well [maintained]. They can’t be[supplied] with cheap, low quality[parts]. OE [quality] is the priority.
CEAR: What’s the competitivesituation like in the Central Europeanaftermarket?Staniszewski: You really have to beaware and on guard 25 hours a day, 8days a week. The competition is sostrong everywhere, [in] every aspect ofthe market. Once you get a customer,you have to know how to get him tocome back. That’s our success. The[number] of happy customers and clientswho come back.
CEAR: What’s one way that yourcompany ensures that obstacles andproblems in the market areovercome?Staniszewski: There’s a lot of emphasisin our company on bringing absolutelyeverything to discussion. To talk as ateam. To exchange different points of
view. To discuss problems, solve them,and act immediately to make thingsbetter. That’s a key issue within thecompany.
CEAR: What problems have youencountered in this market?Staniszewski: [We had a] main[German] distributor in Eastern Europeand his figures were improving, wereenlarging. So, theoretically, we wereseeing steady improvement. The realfact, [however], was that the figures werenot improving because of higher salesbut due to wider markets.
So the volume of sales in the market wasjust getting wider, [growing] into othercountries. But by not working in eachindividual market to improve totalvolume, that allowed our competition tostep in and grab a part of the market.
[The German company] was our maindistributor in the Central Europeancountries and we decided to split up.He’s a distributor of automotive parts,not our distributor of Perfect Circle parts.
I was called into the market and giventhe responsibility for marketing andestablishing a sales network. So now,I’m working hard to get back this shareof the market that we deserve, that Ithink we should have. So it’s a betterbalancing of the market. That’s why thework is 25 hours a dayn
Companies Act is that it allows thepiercing of the corporate veil in case ofmisuse of limited liability. Althoughchanges to the regulation of the specificcorporate forms cannot be discussed inthis brief article, it is important tomention that the minimum amount of theregistered capital for limited liabilitycompanies and shareholding companieswill be raised by the new Companies Actby three times and by two times,respectively.
The new Companies Act requires allexisting companies registered under theold Companies Act to bring their articlesand business operation in compliancewith all new provisions at the first timewhen they amend their corporate
documents and register the modificationswith the Court of Registration.
There are no new corporate formscreated by the new Companies Act.Hungarian corporate forms are (i)general partnership, (ii) limitedpartnership, (iii) union, (iv) jointenterprise, (v) limited liability company,and (vi) shareholding companyn
Legal Continued from Page 15
Sell Your Product,Service,
orOpportunity
with a CEAR™50 Word Classified
for USD$100.Including an Internet Listing
at http://www.cear.com
Fax or Email Your Classified.Include your name,
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Profile Continued from Page 12
© Central European Trade & Marketing, L.L.C. 1998 http://www.cear.com ™ CENTRAL EUROPE AUTOMOTIVE REPORT™ • September 1998 17
Classifieds &Investment Opportunities
CENTRALEUROPEAUTOMOTIVEREPORT™
Russian producer of acidelectrolytes for storagebatteries, liquid antifreeze,lubricants, distilled water,and other chemical productsfor automobiles seeks USsupplier of packagingequipment and partner toestablish a production jointventure.Konstantin Moskalyuk I.S.Laboratoria, Ltd.Tel: 7-3832-242341Fax: 7-3832-242341Russia
Kazakh creator of drafts anddesigns of automotive safetyprojects seeks partner towork jointly with on relatedengineering projects.U.S. Embassy CommercialServiceRe: Yerden IzteleolovTel: 7-3272- 63-36-03Fax: 7-327-581-1576E-mail: [email protected]
Manufacturer of drivingshafts, steering shafts,steering gears, and spareparts seeks foreign investorWieslaw KosieradzkiPIASTTel: 48-22-827-8700Fax: 48-22-826-7341
Poland
Manufacturer of centrifugaloil separators, heaters, waterand oil coolers for cars &trucks, water pumps forvans, trucks, and ships seeksforeign investorWieslaw KosieradzkiPIASTTel: 48-22-827-8700Fax: 48-22-826-7341Poland
Manufacturer of fuel supplysystems for car & vanengines, compressors forpneumatic braking systemsfor cars, buses, & farmtractors, compressor units &pneumatic fittings, & spareparts for compressors seeksforeign investorWieslaw KosieradzkiPIASTTel: 48-22-827-8700Fax: 48-22-826-7341Poland
Manufacturer of hydrauliccylinders, up to 32 barspressure, 25-160 pistondiameter, up to 4,000 mmlength, seeks SlovakRepublic commercialcooperation, offersproduction to order
Jorgen Varkonda SNAZIR re:Rerosa s.r.o.Tel: 421-7-5335-175Fax: 421-7-5335-022Slovak Republic
Manufacturer of exhaustflanges, light welded steelconstructions, agriculturalmachines, and hydrauliccomponents under SauerCo. license seeks jointventure partnerJorgen Varkonda SNAZIRre: Topolcianske Strojarnea.s.Tel: 421-7-5335-175Fax: 421-7-5335-022Slovak Republic
Manufacturer of car & truckair and oil filters seeks jointventure partner forproduction, financial, anddistribution cooperation.Monthly air filter capacityfor cars of 60,000, and6,000 for trucksJorgen Varkonda SNAZIRre: Sandrik a.s.Tel: 421-7-5335-175Fax: 421-7-5335-022Slovak Republic
Manufacturer of pressedparts for cars, press units,electric carriages, and
machine tools seekscommercial or productioncooperationJorgen Varkonda SNAZIRre: BAZ a.s.Tel: 421-7-5335-175Fax: 421-7-5335-022Slovak Republic
Czech designer,manufacturer and tester ofhigh performance vehicleelectronics for timingswitches, central locking,seat heating, airconditioning controls,timing relays, and acousticsignaling seeks partner insimilar business who iscapable of providing newtechnologies and productsfor joint production andaccess to European markets.Josef Dusil CzechInvestre: EL4Tel: 420-2-2406-2267Fax: 420-2-2422-1804Czech Republic
U.S. partner sought forCzech producer ofcrankshafts (various sizesup to 2500 mm lengths) forpurpose of contractmanufacturing. Company issupplier to producers ofengines for trucks, tractors,ships, & stationaryaggregates. 1996 turnoverexpected to be $20 million.Jan Vesely IESCTel: 420-2-2499-3170Fax: 420-2-2499-3176Czech Republic
Partner sought for producerof diesel injectionequipment for development,production, & sale of singleand multi-cylinder in-lineinjection pumps for all typesof diesel engines, as well asfor injection systems,testing, measuring, &adjustment equipment.1995 turnover was $40million.Jan Vesely IESCTel: 420-2-2499-3170Fax: 420-2-2499-3176Czech Republic
Manufacturer of plasticparts for Opel, Mercedes,VW, & Suzuki seeks equitypartner who is engaged inplastic processing business$5 millionCsaba Kilian re: PemuITDHTel: 36-1-118-0051Fax: 36-1-118-3732Hungary
Supplier of seats for Suzukicars & Spare parts forIkarus seeks purchaser.Company undergoingprivatization process.Csaba Kilian re: 02/Aut/96ITDHTel: 36-1-118-0051Fax: 36-1-118-3732Hungary
Battery manufacturer seeksjoint venture partner forprocessing used vehiclestarter batteries$2.1 millionCsaba Kilian re: PerionITDHTel: 36-1-118-0051Fax: 36-1-118-3732Hungary
Russian bus company seeksAmerican joint venturepartner to manufacture newbus models. Business planavailable in EnglishVictor SergeyevichKostromin General DirectorPavlovo Bus Co.Tel: 7-83171-6-81-14Fax: 7-83171-6-03-18Russia
Russian company seeks ajoint venture partner to re-build car and truck tires andrecycle tires and otherrubber products into pellets.Alexander NikolayevichKalin General DirectorKstovo Tire Repair &Recyling PlantTel: 7-8312-38-12-75Fax: 7-8312-38-12-75Russia
Make sure the auto industry hears about your company’s activities inCentral Europe. Send the CEAR™ your news about:
• recent and projected sales and production figures• new joint ventures or cooperation agreements• facility expansion plans (e.g. new equipment, new buildings)• business expansion plans (e.g. new markets, new products, new supply contracts)• personnel changes, recent awards, licenses, certifications• new product news• upcoming company events (e.g. supplier conferences)
Fax, email, or mail press releases to the CEAR™:Email: [email protected]: +1-206-374-5282Toll Free inside US Fax: (800) 684-3393Slovak Republic Fax: +421-7-361-085Post: 4800 Baseline Rd. Suite E104-340, Boulder, CO 80303 USA
Get the Word Out, Send Us Your News!Make Sure Your PR & Marketing People See This
18 September 1998 • CENTRAL EUROPE AUTOMOTIVE REPORT™ http://www .cear.com ™ © Central European Trade & Marketing, L.L.C. 1998
GM Buys DEM 7 Million Worth ofSupplies From Slovakia
In 1998, Slovak producers will supplyGM with parts and components valued atDEM 7 million ($3.86 million), saidJaroslav Dolezal from Opel C&S Ltd .In 1997 the volume reached DEM 4.5million, and in 1996 it was only DEM2.5 million.
The value of supplies for the new OpelAstra will hit DEM 4 million, whichincludes vibration dampers fromContitech Vegum and rear brake cablesfrom Kuster-VS.
Other Opel models use rubber bundlesfrom Contitech Vegum, cables fromKuster, powder metallurgy products fromMiba Slovakia, and clutch discs fromSachs Trnava.
Supplies provided by Czech producers toGM reached DEM 106 million ($58million) in 1997. This year, the figure isexpected to rise to DEM 140 million.According to Dolezal, most of theSlovak supplies are made by Slovaksubsidiaries of foreign companies, whilethe rest are made by small domesticbusinesses.
He said bigger investment plans inSlovakia are prevented by “more flexibletax policies in the neighboring countries,especially in Poland and Hungary”.
Slovak Bus Transport Companies toReceive 139 Buses In 1998
Slovak bus transport companies(Slovenska autobusova doprava -SAD) are going to receive 139 newbuses this year. Some 51 Karosa inter-city buses will be imported from theCzech Republic, and 88 buses will bemanufactured by Slovak companies,reported officials from the Ministry ofTransport, Post andTelecommunications (MTPT).
The total price of the Czech busesamounts to SK 135 million ($3.8million), to be paid over the next fouryears at a discount interest rate of 8.8%.The buses will be imported by SADBanska Bystrica during August orSeptember. The Slovak buses will bepurchased on a credit provided byMTPT, the Slovak Guarantee andDevelopment Bank, Post Bank,Transport Bank, and the Ministry of
1999.
The company also won a $20 milliontender for the City of Las Vegas. The citywill purchase sixty low floor buses, andhas the option to purchase another 15buses. Delivery will probably take placein 1999.
“We have an approximately two yearorder book, and our target is to reach atleast $6 million in net income for thisyear,” NABI Chief Financial Officer PeterHorvath told the CEAR.
Slovak Republic
Volkswagen Pumps Up The Volume InSlovakia — More Investment & NewComponent Plant
Volkswagen Bratislava announced that itis increasing its investment plan for 1998to enable it to produce 1,000 vehicles aday in less than two years. This year, thecompany will invest DM 230 million($130 million) into its Slovak operations,instead of the originally planned DM173.6 million ($98 million), reportedcommercial director Jozef Uhrik.
VW Bratislava currently produces 500cars a day. Since the beginning of 1998,the company has assembled more than44,000 cars, over 144,000 transmissions,and some 3.2 million components. VW’sstaff will expand from today’s force of4,800 workers to 6,000 workers.
VW also announced that it will build anew car components plant in centralSlovakia in cooperation with the companyZTS TEES. This will be the third VWplant in Slovakia, after VW Bratislavaand VW Elektricke systemy in westernSlovakia.
The new plant will be a pressing worksand a tool production plant located inMartin, Slovak Republic. VW will investsome SK 200 million ($5.8 million) intothe new plant. The project is expected tostart by the end of 1998.
According to commercial director JozefUhrik, VW Bratislava is the onlyproduction plant within the VW Groupthat produces cars, transmissions, andcomponents at the same time. “Weintended to include the transmissions andthe components because of connectingSlovak sub-deliveries for the automotiveindustry,” said Mr. Uhrik.
Czech, Ltd. will manufacture heatexchangers for personal cars at a 93,000-meter site in Kladno, Czech Republic.
Construction of the new plant started inApril 1998 and completion is planned forOctober 1998. Machinery and otherequipment will be installed fromNovember 1998 to January 1999, withproduction scheduled to begin in January1999.
In the plant’s first phase, 170 employeeswill produce 40,000 condenser units eachmonth for automotive air conditioners.The number of employees may rise to 200at a later stage. Total investment will hit2.5 billion Japanese yen ($22 million).
Hayes Lemmerz Solidifying CzechPresence
Hayes Lemmerz is pouring $26 millioninto a new wheel plant in Ostrava, CzechRepublic. The company has operated awheel manufacturing plant in the CzechRepublic since 1993. Hayes’s maincustomer is Skoda Auto, and later in 1998the company will start supplying Ford.Hayes also plans to supply Opel’s newPolish car assembly plant.
For its new investment, Hayes expects toreceive investment incentives pursuant tothe Czech Republic’s recently introducedinvestment incentives scheme.
FIAMM Purchases Battery MakerAkuma
According to Czech press reports, theAkuma battery company will bepurchased by the Italian battery makerFIAMM , one of Europe’s largestproducers of car batteries. Akuma, basedin Mlada Boleslav, Czech Republic,manufactures car, truck, and motorcyclebatteries.
Hungary
NABI Scores New Bus Contracts in US
North American Bus Industries (NABI)announced that it won two bus tenders inthe US. The company will supply the Cityof Albany (Capital DistrictTransportation Authority ) with 23 lowfloor, stainless steel buses. The contract,valued at $6 million, is the first sale ofNABI’s newly developed stainless steelbus model. The buses will be delivered in
Highlights Continued from Page 13
Continued on Page 20
© Central European Trade & Marketing, L.L.C. 1998 http://www.cear.com ™ CENTRAL EUROPE AUTOMOTIVE REPORT™ • September 1998 19
Vehicle Category (ECE) 1997 1996 ChangeCars (M1) 303,091 291,977 +3.81Vans/LCVs (N1) 22,130 21,550 +2.69Trucks/CVs (N2+N3) 7,768 8,410 -7.63Motorcycles & Mopeds (L) 16,900 15,759 +7.24Buses (M2 & M3) 948 916 +3.49Trailers & Semitrailers (O3 + O4) 2,932 2,777 +5.58TOTAL 353,769 341,389 +3.63
*Figures include sales of domestic producers, sales of new imported vehicles, and sales of imported used vehicles.
Source: SAP
1997 Czech Republic Vehicle Sales*
Passenger Cars Commercial Vehicles
Units Sold Market Share Units Sold Market ShareMake 1998 1997 1998 1997 Make 1998 1997 1998 1997FIAT 85,109 90,522 29.99 34.62 DAEWOO M. 5,328 6,483 22.23 24.97DAEWOO 77,699 64,975 27.38 24.85 DAEWOO 3,419 6,432 14.26 24.78GM - OPEL 23,092 22,848 8.14 8.74 CITROEN 3,177 2,447 13.26 9.43FORD 13,707 10,027 4.83 3.83 FIAT 2,687 2,719 11.21 10.47SKODA 13,371 11,453 4.71 4.38 MERCEDES 1,911 1,212 7.97 4.67RENAULT 12,648 13,872 4.46 5.30 VW 1,513 810 6.31 3.12VW 9,562 7,785 3.37 2.98 SKODA 1,248 812 5.21 3.13TOYOTA 9,561 4,454 3.37 1.70 FORD 1,016 1,539 4.24 5.93HONDA 7,853 4,911 2.77 1.88 PEUGEOT 1,011 959 4.22 3.69SEAT 6,657 8,106 2.35 3.10 RENAULT 602 651 2.51 2.51Others 24,499 22,552 8.63 8.62 Others 2,056 1,895 8.58 7.30Total 283,758 261,505 100.00 100.00 Total 23,968 25,959 100.00 100.00
Source: SAMAR, s.c.
Best Selling Brands in Poland (YTD June 1998) Ranking By Retail Volume
Body version Units Market share1998 1998
3 doors hatchback 63,435 22.364 doors sedan 86,067 30.335 doors hatchback 112,879 39.785 doors wagon 16,575 5.842 doors coupe/cabrio 752 0.275 doors MPV 3,617 1.273 doors off-road 78 0.035 doors off-road 355 0.13
Source: SAMAR, s.c.
Car Sales in Poland By Body Type (YTD June 1998)
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1998Sept. 3-10 Hanover, Germany Auto ShowSept. 14-16 Nagaya, Japan Int’l Symposium on ehicle ControlsSept. 15-20 Nitra, Slovakia Autosalon NitraSept. 15-20 Frankfurt, Germany AutomechanikaSept. 18-27 Bucharest, Romania Bucharest Motor ShowSept. 27-Oct. 1 Paris, France FISITA World CongressSept. 29-Oct. 1 Detroit, MI Int’l Body Engineering ConferenceSept. 29-Oct. 4 Budapest, Hungary AutotechnikaOct. 1-3 Brussels, Belgium Electric Vehicle SymposiumOct. 1-11 Paris, France Int’l Road Transport ExhibitionOct. 1-11 Paris, France Int’l Paris Motor ShowOct. 6-8 Detroit, MI Global Powertrain CongressOct. 8-12 Ho Chi Minh City, Vietnam Auto Vietnam 98Oct. 12-13 Warsaw, Poland IBC UK Automobiles in
Eastern Europe ConferenceOct. 13-15 Amsterdam, The Netherlands InterAuto ’98Oct. 16-25 Sydney, Australia Int’l Motor ShowOct. 16-25 Panama City, Panama Panama Auto ExpoOct. 23-Nov. 1 Birmingham, UK British Int’l Motor ShowOct. 29-Nov. 1 Istanbul, Turkey Commercial Vehicles ’98Oct. 29-Nov. 8 Sao Paulo, Brazil Brazil Automobile Trade ShowNov. 4-7 Bangkok, Thailand Asia Automotive ’98Nov. 4-8 St. Petersburg, Russia St. Petersburg Auto &
Service ShowNov. 5-8 Istanbul, Turkey Auto ShowNov. 12-15 Cairo, Egypt, Cairo Motor ShowNov. 14-22 Suntec City, Singapore Singapore Motor ShowNov. 17-21 Sofia, Bulgaria Bulgaria Specialized Trade ShowNov. 26-Dec. 6 Montevideo, Uruguay Montevideo Motor ShowNov. 27-Dec. 6 Essen, Germany Essen Motor Show
Exhibitions, Conferences, and Shows in 1998 & 1999
Romania
ARO of America Sells Assets to EastEuropean ImportsOn June 12, 1998, WorldwideEquipment Corp. announced that itssubsidiary, ARO of America, Inc., hassigned a letter of intent with EastEuropean Imports, Inc. (“EEI”). Theagreement provides for ARO to sell all ofits assets and certain liabilities to EastEuropean Imports in exchange for 40%of the outstanding stock of EEI.
EEI is the distributor of the RomanianARO, a sports utility vehicle that isexpected to have a base price of $13,500in the US. The sale consolidates theassembly and distribution operations ofthe ARO vehicle.
“The acquisition of the ARO assetscombined with our network ofapproximately 160 dealers nationwidewill expedite and help insure our goal ofproducing and selling over 1,000vehicles per month in the near term,”said John Perez, President of EEI.
Perez also announced that East EuropeanImports, Inc. will change its name toARO Automotive Corporation .
Romania’s Roads Get Help From
Finance.
Slovak bus producers’ productioncapacities for 1998 are: Slovbus Inc.,Nove Mesto nad Vahom (20 inter-city),Liaz Zvolen (70 inter-city), and NovopInc., Lucenec (10 city).
According to the Ministry of Transport,the future for Slovak bus makers lies incooperation with foreign companies or inspecialization, such as in the productionof small buses.
At present, 54 state-owned bus transportcompanies operate about 5,400 buses,with 85% of the buses being operatedbeyond their normal economic life span.According to the MTPT, a completerenewal of the bus fleet is necessarywithin the next six years.
Isuzu Reportedly Negotiating WithSlovak Government
Isuzu is rumored to be negotiating withthe Slovak government about building anew assembly plant for off-road vehiclesor LCVs in eastern Slovakia near Kosice.No other details were available at presstime.
longer subject to thin capitalizationlimits. The limits to tax deductibility dostill apply to loans granted by relatedparties.
Input Price of Tangible AssetsIncreased to 40,000 CZK
The input price of tangible assets subjectto depreciation was increased to 40,000CZK ($1,200), the same as thatapplicable to intangible assets. As aresult of this change, a differencebetween what is a tangible asset foraccounting and tax purposes arises. Theaccounting rules still specify that thelimit for determining tangible assets is20,000 CZK.
The above is based on the unofficial wordingof the law which is pending officialpublication in the Collection of Laws.
Nov. 29-Dec. 4 Jeddah, Saudi Arabia, Jeddah Motor ShowNov. 30-Dec. 2 Graz, Austria SAE Total Life Cycle ConferenceDec. 2-5 Jakarta, Indonesia Indonesia Auto ShowDec. Detroit, MI SAE Global Vehicle Development Conf.1999Jan. 9-18 Detroit, MI North American Int’l Auto ShowJan. 16-24 Brussels, Belgium Brussels Int’l Motor ShowFeb. 4-14 Amsterdam, The Netherlands Int’l Motor ShowMarch 11-21 Geneva, Switzerland Geneva Int’l Motor ShowMarch 26-Apr. 4 Belgrade, Yugoslavia Belgrade Motor ShowApril 8-16 Stockholm, Sweden Stockholm Motor ShowApril 11-17 Zagreb, Croatia Zagreb Motor ShowApril 13-18 Riga, Latvia Riga Motor ShowApril 19-25 Turin, Italy Turin Motor ShowApril 28-May 6 Seoul, Korea Seoul Motor ShowMay 22-30 Barcelona, Spain Barcelona Int’l Motor ShowMay 27-June 1 Poznan, Poland Int’l Automotive ShowJune 2-9 Beijing, China Beijing Int’l Motor ShowJune 5-10 Brno, Czech Republic Brno Motor ShowJune 18-26 Sofia, Bulgaria Sofia Motor ShowAugust 24-29 Moscow, Russia Moscow Motor ShowSept. 30-Oct. 10 Bucharest Romania Bucharest Motor ShowOct. 21-30 London, England London Motor ShowOct. 22-Nov. 3 Tokyo, Japan Tokyo Motor ShowNov. 9-11 Birmingham, UK Autotech ’99Nov. 20-28 Athens, Greece Athens Int’l Motor Show
Highlights Continued from Page 18
Visit Trade Events under the Expert Directories at http://www.cear.com Tel: +1-440-843-9658, Fax: +1-206-374-5282, Email: [email protected]
Tax Continued from Page 15
European Investment Bank
The European Investment Bank isproviding Romania with a major loan tohelp the country rebuild its road system.The loan, valued at ECU 225 million($249 million), will have a 20-year term,with a five-year grace periodn
© Central European Trade & Marketing, L.L.C. 1998 http://www.cear.com ™ CENTRAL EUROPE AUTOMOTIVE REPORT™ • September 1998 21
• The Skoda 120 is the most frequently registered car model with 463,306 registrations. The average year of production ofthe car is 1982.24 and the average age is 15.76 years.
• The Skoda Octavia with 19,106 registrations is the youngest car model. The average age of the model is 0.95 years.• The Avia 30 is the most registered truck with 22,494 units registered.• The Liaz 100.47 and the Tatra 815 are the most registered road tractors, with 1,825 and 1,500 units registered,
respectively.• The Karosa 734 is the most registered bus with 5,899 units registered.• The Jawa 20 is the most registered small motorcycle with 244,322 units registered.• The Jawa 250/559 is the most registered motorcycle with 25,635 units registered.
Source: Police Central Vehicle Registration Office
Czech Republic Vehicle Park Highlights
Price in Czech Crowns (CZK) as of 7/31/98Company Product Share Price Max. Price in Last Year Min. Price in Last YearAteso Brake components 322.30 516 241CZ Strakonice Gearboxes, chains, dies 65.10 93.03 52Daewoo Avia CVs, engines 210 598 190.51Jihostroj Hydraulic elements 77.51 210 37Magneton Alternators, relays, starters 51.00 75 25.86Motokov Vehicle importer/exporter 218 304.50 100.60Motorpal Diesel injection equipment 122.00 202 60Praga Transmissions, special CVs 36 218 36Skoda Liaz CVs, engines, axles 33.94 73 32.33Tatra Trucks and truck parts 71 85 59.70
Source: Prague Stock Exchange$US 1 = CZK 30.81 (8/1/98)
Publicly Traded Auto Sector Stocks in the Czech Republic
Region 1997 Population Per 1 Car 1996 Population Per 1 CarPrague 2.26 2.40Central Bohemia 2.77 3.00Southern Bohemia 2.79 2.97Western Bohemia 2.85 3.04Northern Bohemia 3.19 3.42Eastern Bohemia 3.09 3.32Northern Moravia 3.80 4.08Southern Moravia 3.35 3.60Czech Republic Total 3.05 3.26
Source: Central Vehicle Register
Czech Republic Car Density By Region
22 September 1998 • CENTRAL EUROPE AUTOMOTIVE REPORT™ http://www .cear.com ™ © Central European Trade & Marketing, L.L.C. 1998
Bulgarian Sales & ProductionReview
More Supplier Lists
Interview with Timken
Human Resources Special Report
Poland Sales and ProductionStatistics
Logistics Review
North American Bus Industries inFast Lane
Poland Tax & Customs Update
FUTURE ISSUES
Delphi’s New Drive-By-Wire Technology EliminatesMechanical ComponentsNew Product Review
High-tech vehicles of the 21st Centurywon’t have to rely on mechanicalcomponents for braking, steering,throttle, and suspension controls.Instead, all of those systems canfunction electronically through a newdrive-by-wire system developed byDelphi Automotive Systems.
With Delphi’s “X-By-Wire” system,steering, braking, throttle and othervehicle functions are performed withoutthe traditional steering column, steeringshaft, rack & pinion gear, brake booster,master cylinder, hydraulic lines, throttlecable and linkages.
Instead, each system is connected bywires that form a pathway tocommunicate information from sensorspositioned throughout the vehicle to anelectronic control module. This controlmodule then provides input to asystem’s actuator that performs themechanical function of the system.
This approach significantly reduces theamount of mechanical componentsrequired in the vehicle and enhancesvehicle performance.
Delphi’s “X-By-Wire” is beingdeveloped by the company’s SaginawSteering, Chassis, Energy & EngineManagement, and Delco Electronicsdivisions. The systems which make up
“X-By-Wire” include:
Brake-By-Wire. The technology behindDelphi’s Galileo braking system and theworld’s first production brake-by-wiresystem. Galileo is a family of intelligentbrake control systems that provide brakepower assist, ABS, traction control,vehicle stability enhancement control,regenerative brake blending control,automated braking, and tunable pedalfeel in a single, modular system.
Throttle-By-Wire. This consists of apedal module containing sensors thatrelay driver acceleration intentinformation to engine electroniccontrols, while also supplying forcefeedback to the driver. The enginemanagement system then determines andpositions the air valve in the appropriateposition through the use of a motor. Italso synchronizes air, fuel, and dilutioncontrol to improve engine performanceand emissions.
Damper-By-Wire. This system featuresfour electronically controllable dampers(shocks or struts), a steering sensor, andfour ride motion sensors. The sensorinformation is passed to the electroniccontrol module that analyzes thevehicle’s dynamic conditions anddetermines the optimum damping levelto command from the dampers. Theseadjustments are rapid for real-time
control of vehicle ride and handling.
Roll-By-Wire. This system provides real-time roll stiffness control at the front andrear of the vehicle. Actuators are added tostabilizer bars to allow active or semi-active control of roll stiffness. Thissystem allows for reduced head toss andimproved wheel articulation in additionto reduced roll angle.
Front Steer-By-Wire. This systemeliminates the mechanical connectionbetween the driver and the front wheelsof the vehicle. With Front Steer-By-Wire,the traditional steering column, steeringshaft, and steering gear are replaced bytwo actuators positioned in the vehicle’sfront corners. These actuators receiveinput from the control module and turnthe front wheels accordingly.
Rear Steer-By-Wire. The technologybehind Delphi’s Four Wheel Steeringsystem, this electrical rear steeringsystem uses sensors to position the backwheels based on front wheel position andvehicle speed. It provides a tighterturning radius, increases vehicle stabilityand enhances trailering.
Traxxar. A vehicle stability enhancementsystem that uses an extra set of sensorsintegrated with ABS and TractionControl to apply individual wheel brakeintervention to assist the driver inreducing the difference between thedriver’s requested direction and the actualvehicle directionn
Vehicle Category Park Avg Ageof Production Avg Age
Cars 3,382,409 1983.85 14.15Trucks 246,453 1987.31 10.69Road Tractors 17,430 1989.06 8.94Special Vehicles 89,939 1983.38 14.62Motorcycles 916,671 1969.30 28.70Buses 20,741 1986.65 11.35Trailers for CVs 69,786 1987.77 10.23Trailers for Cars 472,814 1984.88 13.04Trailers for Agric. Tractors 116,163 1974.36 23.64Semitrailers 26,934 1987.91 10.09Agricultural Tractors 156,907 1976.80 21.20TOTAL 5,559,503 1981.34 16.56
Source: Police Central Vehicle Registration Office
Czech Republic Vehicle Park (as of 12/31/97)
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Automotive Market Highlights and News Stories as they come in, information fromCENTRAL EUROPE AUTOMOTIVE REPORT™ columns before they are published, reliable autoindustry news, automotive sales and production figures, tips, information from orabout automotive conferences, previews of upcoming stories in the CEAR ™, and inter-view excerpts. Informative and Fast. AutoNewsFast ™ on your computer every Mondaymorning. Need a Competitive Edge in Central Europe? Don’t Be Left Behind. AutoNewsFast ™keeps you ahead of the competition! Don’t miss another week of news. Fax this OrderForm today, and mail your personal, business, or bank check or wire tomorrow.
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24 September 1998 • CENTRAL EUROPE AUTOMOTIVE REPORT™ http://www .cear.com ™ © Central European Trade & Marketing, L.L.C. 1998
Company: Lucas AutobrzdyLocation: Jablonec nad Nisou, CzechRepublicContact: Francois Augnet, AftermarketOperations ManagerBusiness: Brake System ComponentManufacturing & Sales
Lucas Autobrzdy, a joint venturebetween Lucas Varity and the Czechcompany Ateso, isn’t sitting still andwaiting for opportunity to comeknocking. The company is activelyexploring new ways to do business inCentral Europe.
Lucas Autobrzdy manufactures and sellsbrake system components to OEMs suchas Skoda, as well as to other automotivecustomers in Europe. The company’saftermarket division sells brakes for allmakes of cars, and is also the distributorof Kayaba shock absorbers in the Czechand Slovak Republics.
New Fast Fit Center Network
Lucas Autobrzdy saw an opportunity forfast-fit centers in Central Europe and isnow executing its strategy. In May1998, Lucas opened its first fast-fitcenter in the city of Most in the CzechRepublic. Three additional centers willbe opened in Brno in the near future.
Lucas is working with tire distributors inthe Czech Republic and converting theminto fast fit centers that will initiallyspecialize in brakes and shock absorbers,with other products to be added in thefuture.
“This is a soft franchise concept,”explained Francois Augnet, LucasAutobrzdy’s Aftermarket OperationsManager. “There’s no royalty fee to payto Lucas for being a part of the net-work.” Franchisees are supplied with
Lucas parts and components and know-how.
“We’re starting in the Czech Republic asa laboratory,” said Augnet. In the CzechRepublic, the centers will operate underthe name Rychloservis. Lucas’s strategyis for the centers to become specialists incar under body service.
“This is something which is requested bythe motoring public,” said Augnet. “Wehave a very, very strong response fromforward thinking garages.”
According to Augnet and confirmed by amotorist survey Lucas conducted in theCzech Republic in August 1997, “thecustomer requirements here are nodifferent to that of Western customers.They want the job done quickly, close tohome, and at hours that are convenient tothem.”
To satisfy the needs of their franchiseecustomers, Lucas uses a mobile trainingunit to bring new partners up to speed.
“We’re not requesting that theRychloservis operators come to us,” saidAugnet. “We’re going to them.” Lucashas a van that is equipped with a trainingvideo, a work bench, and other materialsto help train the Rychloservis garageowners and their staff.
“We’re [working with] people who havea limited staff, 2 to 3 people, so we don’texpect them to close their shop whilethey’re converted into a LucasRychloservis,” he said. “So we’reactually going to them and doing thetraining on the spot.”
By the end of 1998, Lucas expects tohave a network of 22 fast-fit centers inthe Czech Republic, with this numbergrowing to 40 by the end of 1999. In the
future, the company plans to expand itsnetwork into other Central Europeancountries.
Lucas is cooperating with the Czech tiremaker Barum Continental, a jointventure between Barum Holdings andContinental Tires, who is alsoestablishing a network of fast fit centersin the Czech Republic. Lucas isproviding "know-how" to nominatedBarum tire workshops and suppliesthem with Lucas braking products. Todate, Barum has 31 brake repairworkshops and plans to open anotherthree by the end of the year.
State of the Art On-line OrderingSystem
Lucas Autobrzdy has developed anintranet system that will allow existingcustomers to place orders, find out thestatus of their orders, and find out theiraccount histories.
The customer will have access to suchdetailed information as whether theproducts they’ve ordered are in thewarehouse or on a delivery truck. Thesystem is integrated with Lucas’smainframe system and should becompletely operational by November1998.
“This is certainly the first such systemin the Czech Republic,” said Augnet.“This is also the first [system] in LucasVarity.”
Augnet noted that in the Czech Repub-lic, customers are adapting very easilyto the new system. “People are wel-coming the initiative,” he said. “Theywant to know where their parts are, likeany customer, so the demand was thereplus the will to accept new initiativesand technological developments.”
The new system also helps Lucas keepits staff numbers and overhead stablewhile absorbing the expansion of itsbusiness throughout the regionn
Lucas Rolls Out Fast Fit Network InCzech RepublicCompany Spotlight
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Passenger Cars Light Commercial Vehicles Medium Commercial VehiclesMake Units % Change Make Units % Change Make Units % Change
’98 v ’97 ’98 v ’97 ’98 v ‘97Daewoo Tico 24,817 34.14 Polonez Truck 3,229 -48.50 Daewoo Lublin 4,878 -3.69Daewoo Lanos 23,023 - Fiat CC Van 1,695 16.66 Mercedes Vito 1,523 61.85Fiat Palio/Sienna 21,880 - Citroen C15 1,624 -15.94 VW Transporter 1,045 89.31PF 126 21,283 -23.89 Citroen Berlingo 1,301 347.08 Ford Transit 756 -36.89FSO - Polonez 16,577 -44.24 Skoda Pick up 1,248 53.69 FSC - Zuk 450 -68.27Fiat Cinquecento 15,278 -51.80 Fiat Uno Van 633 12.04 Iveco Daily 430 8.59Opel Astra 13,882 25.79 Peugeot Partner 499 -25.41 Mercedes Sprinter 388 43.17Skoda Felicia 11,332 -1.06 GM - Opel Combo 480 -13.04 Peugeot Boxer 369 33.21Fiat Punto 10,021 2.64 Ford Courier Van 228 -20.28 Fiat Ducato 359 -46.50Fiat Uno 8,586 -37.42 VW Caddy 198 -4.35 Kia Ceres 331 45.81
Source: SAMAR, s.c.
Best Selling Models in Poland (YTD June 1998)
Brand I-VI 1997 Market Share % I-VI 1998 Market Share % Change %ALEKO 0 0.00% 00.00%CITROEN 388 6.02% 480 4.47% 23.7%DACIA 2 0.03% 1 0.01% -50.0%DAEWOO 0 0.00% 431 4.02%DAIHATSU 2 0.03% 0 0.00% -100.0%FIAT 419 6.50% 981 9.14% 134.1%FORD 522 8.09% 968 9.02% 85.4%GAZ 285 4.42% 215 2.00% -24.6%HYUNDAI 164 2.54% 267 2.49% 62.8%KIA 90 1.40% 345 3.22% 283.3%LAND-ROVER 10 0.16% 35 0.33% 250.0%MAZDA 744 11.53% 757 7.06% 1.7%MERCEDES 275 4.26% 525 4.89% 90.9%MITSUBISHI 277 4.29% 682 6.36% 146.2%NISSAN 421 6.53% 865 8.06% 105.5%OPEL 526 8.16% 522 4.87% -0.8%PIAGGIO 3 0.05% 0 0.00% -100.0%PEUGEOT 469 7.27% 688 6.41% 46.7%RENAULT 132 2.05% 347 3.23% 162.9%SEAT 189 2.93% 180 1.68% -4.8%SKODA 165 2.56% 373 3.48% 126.1%SUBARU 4 0.06% 3 0.03% -25.0%SUZUKI n/a n/aTATA 4 0.06% 16 0.15% 300.0%TAVRIA 0 0.00% 0 0.00%TOYOTA 702 10.88% 1,098 10.23% 56.4%VOLKSWAGEN 657 10.19% 950 8.85% 44.6%Total 6,450 100% 10,729 100% 66.3%Source: MGE
Light Commercial Vehicle Sales in Hungary
26 September 1998 • CENTRAL EUROPE AUTOMOTIVE REPORT™ http://www .cear.com ™ © Central European Trade & Marketing, L.L.C. 1998
Country 1998 1997 % Change1 Germany 1,939,768 1,856,707 4.472 Italy 1,380,100 1,296,802 6.423 U.K. 1,136,892 1,054,715 7.794 France 865,119 784,518 10.275 Spain 590,708 511,054 15.596 Netherlands 312,032 289,439 7.817 Poland 283,758 261,505 8.518 Belgium 263,765 233,253 13.089 Austria 164,029 159,795 2.6510 Switzerland 158,288 155,859 1.5611 Sweden 127,875 114,447 11.7312 Portugal 127,175 112,056 13.4913 Ireland 103,767 89,034 16.5514 Greece 99,104 87,249 13.5915 Denmark 88,887 92,435 -3.8416 Finland 68,575 59,293 15.6517 Norway 62,725 65,399 -4.0918 Luxembourg 21,280 19,092 11.46
Source: SAMAR, s.c.
New Car Registrations Growth in Europe (YTD June)
Power range Units 1998 Market share 1998
Petrol EnginesUp to 50 HP 75,840 26.73Above 50 HP up to 75 HP 85,257 30.05Above 75 HP up to 100 HP 75,730 26.69Above 100 HP up to 120 HP 33,503 11.81Above 120 HP up to 150 HP 8,130 2.87Above 150 HP 2,376 0.84
Diesel EnginesUp to 70 HP 950 0.33Above 70 HP 1,972 0.69
Source: SAMAR, s.c.
Car Sales in Poland By Power Range (YTD June 1998)
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