Bulgaria – most attractive to the automobile industry in Europe

According to the latest research of Colliers International and Automotive Cluster Bulgaria Bulgaria heads the list of the top ten countries, attractive to the automobile sector in Europe. This was revealed in the latest research of Colliers and Automotive Cluster Bulgaria, which took place during the second half of 2016. In the ranking, created for the purposes of the research, Bulgaria is compared to Romania, Hungary, Poland, Czech Republic, Spain, UK, Italy, France and Germany. The order depends on an index, which consists of the weighted positions of the countries in the list. The weight of each factor is determined by the survey responses in report section “Reasons to Choose Bulgaria”. The result is multiplied by the respective position of the country, according to each indicator in section “Cost Comparison”. The ranking takes into consideration only the sample of expenditures specified in the report. The lower the index, the better conditions are offered by the respective country.

The study of Colliers and Automotive Cluster Bulgaria shows that there are 100 large enterprises, producing parts for almost any brand from the global automotive industry. The prevailing part of them are Tier 1, 2 and 3 suppliers and one is a producer with an assembly plant. The R&D companies are focused on improving the automation of manufacturing, as well as designing contemporary electronic systems. The representatives of the automobile sector are present in all regions of Bulgaria, where the South Central registers the highest activity. The industry employs over 33,000 people. The revenue generated throughout 2015 was EUR 1.55 billion or 3.5% of the country’s GDP.

The companies, which took part in the survey, defined as main advantages of Bulgaria the low labour costs (50%), the EU membership, as well as the proximity to clients and producers were ranked as second most important to 45% of the respondents, followed by the tax incentives, received for doing business in regions with  high unemployment rate (36%). Among the criteria were the low real estate and electricity costs, the currency board, and the accessibility and quality of the workforce.

The challenges to the business, which were identified in the survey were the insufficiency of qualified workforce – problem to 35 % of the respondents, bureaucracy ranked second (22%), the inefficient legal system (13%), together with these were corruption and the fact that the majority of the suppliers were located beyond the national borders.

The survey of Colliers and Automotive Cluster Bulgaria reveals the types of buildings occupied by the automotive industry in the country – owned / renovated factories, owned built-to-suit, rented or rented built-to-suit. More than half of the respondents were in owned / renovated factories. One fifth were situated in owned built-to-suit buildings.

Considering the nearing future, when more vehicles are expected to be electric, Colliers looked into the possible effects of this trend on the automobile sector in Bulgaria. Most of the survey respondents stated that this development would enhance their operations or would not affect them at all. Only 5% regarded the tendency as a threat to the business.

The forecasts of the automobile companies, which took part in the survey, were for a better macroeconomic performance of the country in 2016, compared to 2015, revenue growth, increase of the number of employees, higher investment in equipment and expansion within the current location. What they indicated as a prerequisite for all that to happen was higher investments in trainings, closer connection between educational institutions and business, and further development of the infrastructure in correspondence with the needs of the industry.