Free Trade Zones and Low Taxes to Create Opportunities for the Automotive Industry in Serbia until 2020, Reports Technavio

Technavio analysts forecast the automotive industry in Serbia to grow at a CAGR of approximately to 6% during the forecast period, according to their latest report.

This report covers the present scenario and the growth prospects of the automotive industry in Serbia for the period 2016-2020. The report also presents the manufacturer landscape and a corresponding database of the key manufacturers involved in the production of automotive parts and accessories. In addition, the report discusses the major drivers influencing market growth, and the challenges faced by manufacturers and the market as a whole.

Technavio automotive analysts highlight the following three factors that are contributing to the growth of the automotive industry in Serbia:

• Availability of a competent workforce
• Free trade zones and low taxes
• Government subsidies

Availability of a competent workforce

Siddharth Jaiswal, a lead auto accessories analyst at Technavio, says, “Serbia is characterized by the availability of a competent workforce, which enhances the productivity of manufacturers. The availability of a skilled labor force in the automotive industry in Serbia led to an increase in productivity by 8% during 2004-2015. The availability of technical education, particularly in fields such as natural sciences and engineering, is a major contributor, and Serbian engineers are well-known for their technical expertise. The introduction of joint graduate and post-graduate management courses by local universities and globally recognized business schools has also been a major contributor.”

Free trade zones and low taxes

The government of Serbia provides customs and VAT-free imports of materials through specialized inward processing procedures once a year that manufacturers in the automotive industry can avail. Manufacturers in Serbia that trade within free trade zones are subject to a further simplification of the inward processing procedure for obtaining tax exemptions.

“The taxes levied in Serbia are one of the lowest in Europe, and investors benefit from tax incentives that provide a conducive business environment for new entrants. This is helping in attracting new players and FDI into the market,” says Siddharth.

Government subsidies

In Serbia, standard Greenfield and Brownfield projects can avail non-refundable funds from the government for each new job created within the first three years. The government also provides subsidy of up to 20% of the project’s value for investments of more than USD 50 million that create a minimum of 300 new jobs within the first three years. These initiatives provide new entrants in the motor vehicle parts and accessories market with a favorable business environment. The automotive industry in Serbia is particularly subject to and eligible for the highest subsidies from the government, as the industry is vital to the nation’s economy. These initiatives have benefited 15 projects in the automotive industry over the past four years.

Competitive vendor landscape

A number of foreign and low-cost brands have entered the market and are restricting the growth of domestic manufacturers. The automotive industry in Serbia is characterized by the presence of many well-established global manufacturers. The international players in the market are currently increasing their customer base and are also focusing on increasing R&D investments. The competitive environment in the market is expected to intensify with an increase in product lines and advances in technology.

Some of the key vendors in the market are -

• FAP Serbia
• Fiat
• IDA-Opel
• Ikarbus
• IMT
• Zastava

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About Technavio

Technaviois a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.

Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.

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