BULGARIA CZECH REPUBLIC HUNGARY POLAND CENTRAL ROMANIA SLOVAK REPUBLIC SLOVENIA EUROPE The Source For Automotive Information On Central Europe™ AUTOMOTIVE September 1997 On The Web at ™ http://www.cear.com™ REPORT Volume II, Issue 8 ISSN 1088-1123 Regional Market Tofan Grup owns tire manufacturing and distrib- C Romania uting companies in Romania. Nomura's E Highlights investment, made in July, is the second largest PROFILE foreign investment ever made in the Romanian A Tough Year For Daewoo; Summary automotive industry. R Chairman Park Still Optimistic • Denso investing $100 Million in Hungarian "The tire industry may not be a very exciting diesel injection pump factory industry, but it is nevertheless interesting," said It’s been a difficult year for Dong-Kyu Park, • GM awards stampings contract for Polish fac- a Nomura official. "You have 23 million people Chairman of Daewoo Automobile Romania. tory to VAB Rapotin [in this] market, and then you have the markets Although the factory he oversees is functioning • Nomura invests in Romanian tire maker and in the neighboring countries. We did believe -- smoothly, pumping out Cielos, Esperos, and distributor Tofan Grup and still do -- it was a sound business opportuni- Ticos, there’s been no shortage of crises to keep • UT Automotive building wiring system factory ty." [for more on the aggressively expanding Mr. Park busy. in Poland Tofan Grup, see this month's Company Spotlight • Showa Aluminum building a/c condenser fac- on page 10] The Romanian tory in Czech Republic economy, with its • Ford Targets Slovakia for components pur- Policolor Goes Private spiraling inflation chases and interest rates • VW Bratislava expanding production A controlling stake in Policolor, Romania's and unstable cur- largest paint and industrial coatings producer, rency has become Romania was recently sold to two investment funds. The Daewoo’s nemesis, State Ownership Fund's 51% interest in forcing the company Nomura Takes Minority Stake in Tofan Grup Policolor was purchased on July 28 by the to lower its produc- Romanian-American Enterprise Fund tion targets for Dong-Kyu Park Nomura International plc snapped up a 49% (25.5%) and by the Romanian Investment 1997 due to poor stake in Tofan Grup for $60 million and will Fund (25.5%), a $65 million closed-end invest- domestic sales prospects. In February, the com- arrange debt facilities worth $40 million. The ment fund managed by East Fund pany’s workers, suffering from the effects of high Management. inflation, demanded a re-negotiation of the 5-year labor contract Mr. Park negotiated with them Inside Besides pumping $12 million into upgrading back in February 1996. And the Romanian mass Policolor's technology, the two funds are media has been nipping at Daewoo’s heels, Feature Country ROMANIA committed to boosting exports, which stood in charging that the company has failed to meet its 1996 at a scant 4% of production. The company promised parts localization plan. ✓ Dacia: The Dark Side of the Domestic Car Market: p. 4 recently refurbished its facilities, including the ✓ Bulgarian Car Sales Statistics: p. 6 installation of a 1,000 ton per year metalized The CEAR first interviewed Mr. Park back in May dye production line designed to supply of 1996, after he had been at his new post in ✓ Production & Sales Analysis of Romanian Market: p. 9 Romanian carmakers, and new machinery for Romania for only one month [CEAR Vol. I, Issue ✓ Investors Wanted: Romania's Emergency Investment Ordinance: p. 14 acrylic and epoxy resins and metallic powder 3, July/August 1996]. In June of this year, the ✓ Quoted in Vienna -- Industry Leaders Speak at Auto Conference: p. 11 paint production. Policolor's 1996 sales amount- CEAR spoke with him again to get a progress ed to $42 million. report on Daewoo’s Romanian operation. ✓ Poland Cars & CV Sales Statistics: p. 16 ✓ Anatomy of a Deal -- Romanian Auto Sector Investment: p. 15 Continued on page 2 Continued on page 12 CENTRAL Feature Country Continued From page 1 ponents and devices, including gauges, meters, EUROPE starters, and relays. Daewoo to Start Nubira Production AUTOMOTIVE Poland REPORT™ By the end of 1997, Daewoo Automobile Romania will start production of a new model GM Awards Stampings Supply Contract to succeed the Espero - the Nubira. Daewoo expects to produce 10,000 Nubiras in 1998 and In July, Czech company VAB Rapotin was September 1997 20,000 in 1999, the company's Chairman awarded a stampings supply contract for Volume II, Issue 8 Dong-Kyu Park told the CEAR. GM/Opel's new plant in Gliwice. "After a On The Web at technical evaluation, we decided that they are http://www.cear.com™ In late 1999, the Romania factory will begin the right partner for us," GM's Central production of the M100 model, which is to suc- European Purchasing Director Achim Kuhne ceed the Tico. Mr. Park said that they expect told the CEAR. To fulfill its contractual oblig- Publisher annual production of the new model to reach ations, VAB has formed a new company, VAB Ronald F. Suponcic, Jr. email: [email protected] 20,000-50,000 units after the year 2000. Tychy, which will conduct operations from a new factory in Poland. Editor-in-Chief Daewoo Subsidiary to Make Components in Jeffrey A. Jones, Esq. Romania VAB Tychy will supply 93 different middle- email: [email protected] sized stampings to GM from a factory under Editorial Assistant A Daewoo subsidiary based in Korea is plan- construction in a free economic zone in Tychy, Barbora Grossmannova ning to invest $83 million into a greenfield a town about 35 km from Gliwice. The plant, automotive components factory in Romania. which will employ 500 people, is expected to Research Assistant be finished by the end of 1997 and fully opera- Katarina Trginova Fiat-IVECO in Talks With Roman? tional early in 1998. The company will take Design over two GM press lines that are being disman- Teresa Freeman Plagued by poor management, obsolete tech- tled and transferred to Poland from GM's plant email: [email protected] nology and products, and union unrest, the in Russlsheim, Germany. Webmaster Brasov-based heavy truck manufacturer Gary J. Gustafson Roman has been seeking for years a joint ven- UT Automotive to Build Wiring Systems in email: [email protected] ture with a powerful foreign manufacturer. The Mielec latest on a long list -- which includes compa- Reporters nies such as Navistar International and United Technologies Corp.'s automotive unit Catalin Dimofte Renault — is Fiat-IVECO. According to — UT Automotive — is building a wiring sys- Bucharest sources at Roman, "serious negotiations are tems plant in the Polish city of Mielec. Within CENTRAL EUROPE AUTOMOTIVE being carried out." three years, the company expects the new plant REPORT™, 4800 Baseline Rd., Suite to generate sales of more than $100 million and E104-340, Boulder, CO 80303 USA, is Rocar Wins Bus Contract employ 500 workers. UT Automotive currently published monthly, except August, by operates a wiring systems assembly plant out of Central European Trade & Marketing, The ailing Romanian bus and van maker Rocar Ford Motor Co.'s facility in Plonsk, Poland. L.L.C. in Boulder, Colorado. received a needed boost when it recently won a tender to deliver 300 buses to the Bucharest Eaton Corp. Building Engine Valve Factory The entire contents of this magazine Public Transportation Authority from July are copyrighted 1997 by Central 1997 to December 1998. The company has lost Eaton Corp. is planning to build an engine European Trade & Marketing, L.L.C. several other past tenders, but this time man- valve factory in Bielsko Biala Poland. Valves with all rights reserved. Reproduction or aged to beat its main competitor, DAF Bus. produced at the plant will be supplied to Fiat use in any form, without permission is prohibited. Annual subscriptions are Rocar's new bus model -- U412-260 -- boasts and other European manufacturers. Eaton will US$250 for the CEAR™ Standard low fuel consumption and maintenance costs, is invest $5 million in the facility and employ 150 Edition, and US$450 for the CEAR™ built with many foreign components (mainly workers. Analyst Edition. German), and costs some $150,000. Offices in Central Europe and New Starter Production at Electroprecizia Delphi Purchases Strut & Shock-maker F.A. the United States Krosno Electroprecizia recently started production of a Business & Editorial Inquiries new 0.8kW starter, claimed to be "one of Delphi Automotive Systems signed a letter of 4800 Baseline Rd., Suite E104-340 the most competitive worldwide." The compa- agreement to purchase a majority interest in Boulder, CO 80303 USA ny has also started production of a larger 80A Fabryka Amortyzatorow S.A. (F.A. Tel: +1 (216) 843-9658 alternator, to fit Dacia's Nova range cars. Krosno), the Polish manufacturer of struts and Fax: +1 (510) 927-2630 Electroprecizia is the leader in the Romanian shocks. Delphi plans to invest $90 million in Email: [email protected] market for electromechanical automotive com- the company. 2 September 1997 • CENTRAL EUROPE AUTOMOTIVE REPORT™ © Central European Trade & Marketing, L.L.C. 1997 Use of content without permission is strictly prohibited. All rights reserved. CENTRAL EUROPE AUTOMOTIVE REPORT™ CEAR™ SPONSORS Supporting the Development of the Automotive Industry in Central Europe CENTRAL CENTRAL EUROPE EUROPE AUTOMOTIVE AUTOMOTIVE REPORT™ REPORT™ Market Research Group Internet Services Group The CENTRAL EUROPE AUTOMOTIVE REPORT™ is made possible, in part, through the support of its Sponsors. To become a sponsor of the CENTRAL EUROPE AUTOMOTIVE REPORT™, contact Ronald F. Suponcic, Jr., Publisher, at Tel. +1 (216) 843-9658, or Toll Free in US (888) 206-3548, Fax: +1 (510) 927-2630, or Email: [email protected] Feature Country Continued From page 2 cars will feature special lamps, horns, and com- The purchase of Fomar is part of Roulunds's munication equipment.