Europe’s automotive sector
Europe’s automotive sector puts Slovenia’s skilled workforce in the driving seat
It is estimated that every car in Europe contains at least one Slovenian component. As new trends emerge in the automotive industry, this small but powerful workforce is leading the way in innovation, quality and demand.
Despite a population of just 2.1 million, Slovenia plays a key role in Europe’s automotive sector, supplying its industry leaders. A massive 80 per cent of components produced in the country is exported, worth €7.4bn. This accounts for 16.5 per cent of the country’s entire exports and generates 17 per cent of the country’s GDP.
There are more than 260 auto manufacturing companies in Slovenia making these components, employing more than 18,000 staff, according to the AJPES (Agency of the Republic of Slovenia for Public Legal Records and Related Services).
“It is estimated there is not a single car in Europe without a Slovenian component inside,” says Drago Kavšek, board member for SMEs and large corporates at Intesa Sanpaolo. “Most have around 10 to 20 – from lights and seats to exhaust systems and driving components.”
Revoz is Slovenia’s only car manufacturer and its number one exporter, employing more than 2,000 people. The company was established in 1988 as a joint venture between Renault and Industrija Motornih Vozil but it became a wholly owned subsidiary of Renault in 2004.
Its plant at Novo Mesto is the sole producer of all versions of the Twingo. It also produces the Clio V and the Smart Forfour EV as part of a partnership with Daimler.
Whether manufacturing cars or components, the automotive industry in Slovenia is highly valued for its knowledge, technology and innovation. This is largely due to the education system, which has more 12,000 secondary-school students and 3,300 undergraduates studying mechanical engineering. As a result, the country’s workforce is capable of working to high technical standards.
A knowledge of foreign languages is also a benefit in the automotive industry – particularly German, as many car producers are based there. Slovenia has an affinity with German culture, which means many of their engineers speak fluent German.
With their expertise and professionalism, several Slovenian Tier 2 and 3 suppliers are ready to be promoted to Tier 1 status. It’s the Tier 1 suppliers that supply parts directly to the original equipment manufacturers.
"The skilfulness of our employees is our main competitive advantage as well as our geographical location. Slovenia is in the heart of Europe, so we have close proximity to all major producers in Europe, as well as direct access to international waters."
Drago Kavšek, board member for SMEs and large corporates, Intesa Sanpaolo
Following Covid, location is more important than ever, due to disruption in the supply chain. Instead of looking for the cheapest components from India and China, auto manufacturers prefer to look closer to home.
"Covid has brought a new perspective on the supply chain in the automotive industry. Demand, quality and reliability are now of strategic importance – it’s no longer only about price. This is a major new trend which the whole auto sector in Europe is focusing on."
Petar Vujović, Head of Domestic Corporates & Institutional Client Department, Intesa Sanpaolo Bank
As a result, many Tier 1 suppliers in Slovenia have received additional orders as suppliers in India and China have been put out of work.
Another trend fuelling the growth of the automotive industry in Slovenia is
electric vehicles (EVs). Slovenian suppliers have received many nominations for electrical parts from other regions.
While the EV industry is advanced in manufacturing, it is lagging when it comes to consumer purchasing habits in Slovenia. The country’s aim is to produce half of all newly registered electric cars (and one-fifth of all cars) by 2030. However, the Ministry of Infrastructure says that by the end of 2020 just 3,678 battery electric vehicles (BEVs) and 944 plug-in hybrid vehicles (PHEVs) had been registered.
One reason for this lag in numbers is that national incentives for BEVs and PHEVs have dropped from €7,500 EUR per new BEV to €4,500 EUR, and from €4,500 EUR per PHEV to €0. Therefore, the purchase of a BEV, in comparison to buying a fossil-fuel car, represents a substantial cost that few Slovenians can afford.
It is hoped that hydrogen will play a role in providing alternative sources of energy for the motor industry. The first public recharging point for hydrogen was installed in 2013 at a petrol station as a pilot. The forecast is for a fleet of 33,000 hydrogen fuel cell powered vehicles (FCEVs) by 2030, with a market share of 2.8 per cent.
In addition to providing hydrogen to power FCEVs, there are further hydrogen projects in the pipeline. The European Defence Agency’s RESHUB project has been tasked with establishing 15 hydrogen refuelling points in Slovenia, for both for defence and civil purposes. RESHUB stands for “Defence RESilience Hub Network in Europe”, and the initiative was conceived and is led by the Slovenian Ministry of Defence.
Other countries taking part in the project are Austria, Belgium, Germany and Hungary. As well as increasing sustainable energy in the defence sector, these hubs will form the basis of the development of green transport, while providing additional public refuelling points.
One private internationally respected Slovenian company developing products and solutions based on hydrogen technologies is ECUBES Ltd. ECUBES was involved in delivering Slovenia’s first hydrogen fuelling station in December 2021.
This is part of the development of the inaugural European Hydrogen Valley in the North Atlantic Cross-Border, which involves Slovenia, Croatia and the Italian region of Friuli Venezia Giulia.
Slovenian companies, both private and public, are dedicated to diversification and innovation in the automotive industry. As car manufacturers continue to look for new solutions to comply with the latest environmental and safety requirements while increasing revenue, Slovenia is perfectly positioned to profit and grow.