ACEA

- BULGARIA

A story of growth and rising investment

Bulgaria’s accession to the European Union has fired a wave of investment and business optimism about the future. The automotive sector has shared this mood, boosted by rising vehicle sales and demand for domestically-produced parts.

At 37.5% growth in car sales was one of the highest in the world in 2005, and this was only slightly moderated in 2006, under the impact of tighter curbs on credit. All the most important car-makers are investing significantly to expand their sales operations in the country. In the first three quarters of 2006, Bulgarian passenger car and light commercial vehicle sales totalled 42,626 units, while bus and truck sales totalled 2,685 units.

Automotive parts manufacturing constitutes one of the fastest growing sectors in Bulgaria. Over 90% of automotive enterprises are privately owned and produce mainly for the domestic market. The sector is characterized by the predominance of small and medium-sized enterprises and by a combination of strong engineering skills and low-cost production. Flexibility is a basic characteristic of many of these enterprises which work to clients' demands. After completing an order, they often switch to the production of other parts that are not necessarily related to the automotive sector. They tend to have the equipment and qualified staff that allow them rapidly to reorient themselves to new market niches.

There has been no domestic production of passenger cars in Bulgaria since 1996, when the Rover Group closed its car plant. This means that components manufacturers are active in producing for various European customers: local production ranges from electrical & electronic equipment and spare parts to aluminium and steel wheel rims, batteries, tires, windshields, paints, filters etc, totalling exports for EUR 22.3 million. The most successful example is represented by MELEXIS, one of the global leaders in manufacturing, design and testing of electronics for the automotive industry, whose customers are BMW, Mercedes, Audi, VW, Suzuki and Toyota; Melexis participates in a number of academic programs with Sofia Technical University, IFAG, City University, and American University. The total volume of the company’s investment will reach EUR 30 million in the next 3 years.