The automotive industry has been at the forefront of the national economies of Romania, Bulgaria, and Serbia for more than a decade. After a crisis-hit 2020, sector players were quick to recover and pick up speed, according to the most recent industry report by business intelligence and news provider SeeNext. The report includes an in-depth financial analysis of the performance of 566 core automotive companies in the period 2019-2021 and an analysis of the wider economic impact of the automotive industry in an ecosystem with its adjacent industries. We also provide a comprehensive overview of the progress made towards the wide adoption of electric vehicles in each of the focus countries and look at the most significant investments and merger and acquisition deals there over the last three years.

Revenue and employment growth in 2021

While it was among the most severely impacted by the CODIV-19 outbreak in 2020, the automotive industry in Romania, Bulgaria, and Serbia bounced back in 2021, restoring its revenue to pre-pandemic levels and even growing on top of that. The industry’s aggregate operating revenue in 2021 grew by 13.2% on annual terms to EUR 32 bln, compared with a drop of 9.2% in 2020. It also cemented its role as one of the largest employers in the three countries with 285,000 full-time employees in 2021, up by 3.7% from 2020.

Progress on the road towards electric mobility

As for the single most important challenge the industry has faced in many decades – the transition towards e-mobility – all three countries are showing positive signs of development, as evidenced by sustained double-digit growth rates of new registrations in times when conventional car sales have been stagnating.

Romania maintained its position as the undisputed leader in terms of electric and hybrid vehicle sales in 2022. The number of new registrations of battery EVs in the country jumped by 84% on the year to 11,638 from 6,342 in 2021.

Bulgaria, for its part, rounded out the top three EU members with the fastest growing new EV registrations in 2022, with the leaders being Cyprus and Latvia. As of end-2022, there were more than 4,000 electric vehicles in Bulgaria, 1,002 of which were registered in the last year alone. This marked an annual increase of 131.4% from the 433 EVs registered in 2021.

EV and hybrids still represent a negligible part of the total vehicle registrations in Serbia, but the country’s government has declared its determination to stimulate the uptake of electric vehicles, although it is not legally obliged by the EU regulatory framework to do so as it is not part of the bloc. The Serbian government is especially active in providing state support to manufacturers operating in the area of e-mobility.

Romania is also actively promoting e-mobility, having additional regulatory acts mainly defining incentives for investors in the electric mobility sector and consumers as well as one of the most generous incentive schemes for the purchase of EVs by individuals.

In terms of incentives for individuals, Bulgaria stands at the other end of the spectrum – it is one of the very few EU countries and is the only one among the five major SEE economies, in which no subsidies for the purchase of electric and hybrid vehicles are available to private consumers. However, Bulgaria also has put efforts into attracting foreign investors in the area of e-mobility and the automotive sector is considered to be of strategic importance.

Foreign investors at the driver’s seat

A favourable investment climate and incentives could prove to be the right ingredients for a new boost in the automotive sector as foreign investors remain the main growth driver in each of the three countries in the report. Close to 61% of all automotive companies in the three markets were owned by foreign investors coming from 32 different countries. Germany and Italy were the top sources of foreign investment in the analysed countries with 141 automotive companies having a German or an Italian majority shareholder. Other countries with a significant interest in the region’s automotive industry are France, the Netherlands and Turkey. Our analysis of the most significant investments over the last three years also shows a clear pattern of foreign investment domination.