ACEA

- ESTONIA

National Association: AMTEL

A relative newcomer

Estonia's automobile industry, like that of its Baltic neighbour, Lithuania, is largely oriented towards specialist component manufacturing, rather than the assembly of vehicles. Estonians own fewer cars than the European average. However, all that looks set to change as the country becomes more prosperous and settles in to its new role as a member of the European Union.

In terms of finished cars, foreign models are typically imported before being sold onto the local market through dealerships. Toyota leads the market with a 12 per cent share in sales. Behind Toyota, Mazda, Volkswagen, Peugeot, Ford and Opel are also important players. Since the fall of the Soviet Union and Estonia’s entry into the European Union in 2004, the average age of the car fleet has plummeted. However, 65 per cent of cars have been on the road for over 10 years.

Although there is no motor vehicle production in Estonia, cars now occupy a central role in the country’s economy. In 2006, Estonia imported 74,455 passenger cars (25,515 new and 48,940 used cars), bringing it closer to the European average.

Car sales rose by 30% in 2006, a continuation of the trend set in 2005 when registrations grew by 20.6 % to reach 19,640 units. Rising car sales are the result of Estonia's consumer boom, underpinned by real wage growth of about 7.3 per cent and supported by rapid credit expansion and an improvement in the labour market.

A flourishing component manufacturing sector

Estonia’s industrial strength has traditionally resided in shipbuilding and ship repair. However, over recent years, its engineering and metalworking sectors have begun to branch out into the production of components for various European automotive companies and their suppliers.

Experience of subcontracting, mainly to Swedish OEMs Volvo, Saab and Scania or their suppliers has made Estonian companies more competitive and given them valuable access to know-how and new technologies. Home-grown firm AS Norma, part of the Autoliv group and one of the world’s leading companies in the automotive safety sector, produces safety belts for Eastern and Western Europe and the CIS markets and was the first Estonian company to obtain a QS 9000 certificate. Several Estonian companies are now ISO-certified and the number is on the rise as export contacts develop.

Apart from safety belts Estonian companies manufacture other parts such as mufflers, cattle guards, cables, roof-lifting mechanisms, car window panes, electronic equipment, carpet coverings, plastic components and tools for European car manufacturers.

The sector’s annual sales equate to around €200 million with approximately 67 per cent of production destined for export. The sector employs roughly 4400 people, mainly through subcontractors, and investment in research and development remains low.