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Are Tesla looking to Bulgaria for help?

by Vesela Petrova

The components, manufactured in Bulgaria, are aimed at leading brands such as Tesla, Аudi, Mercedes-Benz, BMW, Mini Cooper, Porsche, Bentley, Lamborghini, Ford, Nissan, Seat, Alfa Romeo, Volkswagen, Volvo, Renault, Mitsubishi, Skoda, Fiat. It is worth mentioning that more than 90% of the air bag sensors in European cars are being made in Bulgaria. The automotive industry in the country employs over 37,000 people, who were accountable for more than 4% of the country’s GDP in 2016.

90% of the air bag sensors in European cars are being made in Bulgaria

Automotive Cluster Bulgaria and Pwc conducted a second consecutive survey of the automotive industry in Bulgaria. The automotive companies in the country, producing components for top international automotive brands, are approximately 130. These are predominantly Tier 1, 2 and 3 suppliers and include producers, which service other industries, as well.

The automotive companies are located mainly in areas around Sofia, Pernik, Vratsa, Mezdra, Plovdiv. Big manufacturing plants exist also close to Sliven, Yambol, Kardzhali, Targovishte and Russe. High potential regions are Vidin and Stara Zagora – the latter chosen for the development of Industrial Zona Zagore (industrial zone), which has already commenced.

The participants in the survey of Colliers International, Automotive Cluster Bulgaria and Pwc pointed out some main advantages of Bulgaria, such as strategic geographical location, allowing for proximity to clients and manufacturers, EU membership, tax incentives, low taxes, labour, real estate and electricity costs, currency board, and variety of specialised schools and technical universities. Bulgaria is among the EU countries with the lowest corporate tax rates – 10%, way below Romania with 16%, Poland – 19%, Slovakia – 21%. The main challenges, identified by the survey respondents were bureaucracy, infrastructure, legal system and labour market dis-balance.

The automotive companies forecasted positive development in general and compared to the previous survey in 2016. 70% of them projected revenue increase, while in 2016 their share was 64%. 55% intended to hire new employees, compared to 41% in 2016. 85% stated they would expand further in the country, opposed to 65% previously. The companies would develop new projects and products, related with innovations and would increase their investment in real estate and equipment.

Among the recommendations, indicated by the automotive companies in the survey of Colliers, Automotive Cluster Bulgaria and Pwc, were optimisation of the normative environment, thus facilitating business and increasing attractiveness to investors, open communication between different industries – sharing of best practices and ideas, decreasing the administrative burden on business, further infrastructure development, synchronising educational system and business needs and higher integration of dual training within the traditional education system.

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