Local automotive industry looking at huge investments this year

Automotive is one of the most important industries in Romania, with a GDP contribution of over 28 percent, according to Economy minister Florin Spataru. There are over 500 companies operating in the sector, employing more than 230,000 workers and covering almost a third of all exports.

By Aurel Constantin

“The pandemic has accelerated the electrification process and has pushed for the development of new projects, which can now also be found in Romania, including in Craiova, contributing European-level objectives like upgraded technology, decarbonisation, and electrification of the entire automotive industry. This transfer will not only bring a change of shareholders; it will also bring new projects, investments in the Craiova factory, and another development opportunity. We should also note that the factory in Craiova will be the only one to produce both passenger and commercial vehicles,” said minister Florin Spataru while attending the takeover event of the Ford Craiova factory by Ford Otosan in July last year.

The Economy minister also mentioned that Ford Otosan had set major objectives for the factory in Craiova, namely investments worth EUR 490 million, an increase in production from 250,000 to 272,000 vehicles per year, the creation of new jobs, and the development of new capabilities.

Automobile Dacia, Ford, and Star Assembly (owned by MercedesBenz) are the biggest exporters in Romania. The automotive industry itself is the country’s biggest exporter, covering almost 30 percent of all exports. That doesn’t just include fully built automobiles, but also components, sub-assemblies, and automotive technologies, which account for over 60 percent of the domestic auto industry.

While Michelin, Star Assembly, Star Transmission, Fujikura or Leoni are manufacturers that mainly focus on production, corporations like Renault, Continental, and Bosch have made significant investments in engineering and research centres in Romania. Continental, the biggest employer in the industry with over 17,500 workers, has six production units and four engineering and research centres, with one third of its engineers recruited from Romania.

New Investments

The automotive industry can also be called a star sector in 2023 because of the value of ongoing investments designed to further develop the sector. Apart from the Ford Otosan investment in Craiova, Mercedes Benz AG will continue investing in the Sebes factory, with a new production unit to be built starting this year. The investment in the new hall is estimated at EUR 134 million. The project is being carried out through the Star Assembly subsidiary in Sebes. The new building will have an area of approximately 33,650 square metres, where 526 new employees will produce approximately 500,000 electric drive units per year for the all-electric Mercedes-EQ models. The construction of the hall will take place over a period of 15 months, between January 2023 and March 2024.

Another big investment was announced by Nokian, the Finnish tyre manufacturer, which decided to relocate a production facility from Russia. The value of the investment is estimated at EUR 650 million for a factory that will produce 6 million tyres every year. "This investment is a significant strategic decision that allows us to envision future growth. A world-class production facility in Europe is a critical step to gain additional capacity and create a balanced production platform as we begin to build the new Nokian Tyres without Russia," said Jukka Moisio, President and CEO of Nokian Tyres. The construction of the facility started in January this year and the first tyres are expected to come out of its doors in the second half of 2024.