There has been rapid development in the automotive sector of the economy over the past few years, and the Czech Republic now produces nearly half a million cars each year. Total automotive industry production exceeded 484 bill. CZK (18.8 % proportion in Czech industrial activity receipts) and the exports increased by 17.7 % to almost 370 bill. CZK, which is nearly a fifth in the total exports of the Czech Republic. Altogether 88 % of the automotive industry was exported to EU countries.
The automotive industry represents 13.3 percent of Czech industrial production and is one of the most prosperous sectors of Czech industry. The automotive industry employs more than 120,000 people, an increase of 40 per cent on 15 years ago. A number of Western carmakers have built factories in the country in recent years because of its lower labour costs and its central location in Europe.
Foreign capital is mostly concentrated on car industry in Czech: 46 percent. Most of the biggest investors in Czech are firms residing in Germany (25 percent) and in Japan (20 percent) followed by firms from USA and Netherlands. In general, firms from EU participate on the total amount of investments from three quarters.
The Czech Republic produces the most cars of any country in Central and Eastern Europe. At the core of the Czech automotive sector is Skoda Auto, part of the Volkswagen Group since 1991. In 1997, Skoda Auto over-took Fiat to become the largest car manufacturer in Central Europe. The plant that manufactures the upscale Octavia model range is one of the most efficient in Europe, with six component systems integrators supplying modules directly to the assembly line. At the end of 2001, PSA Peugeot Citroen and Toyota Motor Corporation decided to build a plant to produce a new class of automobiles in the Czech Republic.
