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south-east european

INDUSTRIAL MARKET

6

SEE INDUSTRY

Bulgaria has managed to simultaneously have

limited automobile production, yet emerge as one

of the major automobile importing countries in the

EU, importing both used and new automobiles. This

somewhat of a phenomenon is outlined in one of

Technavio's latest report on the automotive indus-

try in Bulgaria until 2020. The global technology re-

search and advisory company points out some of

the most prominent emerging trends driving the au-

tomotive industry in the country, among which are

the increased adoption of electronic devices in au-

tomobiles, the focus in niche segments and the

strong demand for batteries from the automotive

sector.

Government support for theauto-

motive industry

Automotive parts manufacturing and design in

Bulgaria, especially for electronics, has been in-

creasingly strong post the economic crisis in 2008,

outlines the report. This is partly due to the fact that

the Bulgarian government has been encouraging

manufacturers of automotive parts and accesso-

ries to set up and expand their manufacturing plants

in the country. Their efforts were rewarded, be-

cause since the crisis the automotive manufactur-

ing capacity in Bulgaria has expanded by about

85% and is likely to expand further. The industry is

supported by government policies that favor inves-

tors in addition to the cheap skilled labor available

in the country. All these factors combined increase

the chances of Bulgaria emerging as a key supplier

of automotive parts and accessories in the EU and

the Middle East and thereby presenting potential

growth opportunities for manufacturers.

Automotive growth

The automotive industry in Bulgaria is expected

to grow steadily at a compound annual growth rate

close to 4% over the period 2016-2020, Technav-

io's paper predicts. Many reasons for this develop-

ment are pointed out - for example, automobile reg-

istrations have been increasing in Bulgaria, with

about 130,000 units registered in 2014, and a rise

in the number of on-road automobiles directly influ-

ences aftermarket sales. Factors such as the in-

creasing sales of imported automobiles and longer

lifespan of automobiles in Bulgaria will lead to an

augmented demand for automotive parts and ac-

cessories in Bulgaria. The use of automobiles for

long periods influences consumers to increase their

spending on automobiles, which is expected to cre-

ate new opportunities for automobile manufactur-

ers in the coming years.

Still, probably the most significant trend that is ex-

pected to propel this market's further growth pros-

pects is the increasing adoption of electronic devic-

es in automobiles. A desire to differentiate their

products has led automobile manufacturers to in-

corporate several electronic components in the ve-

hicles. In addition to that, consumers also prefer

automobiles incorporated with advanced electron-

ics and devices, such as infotainment systems and

active and passive safety systems, which is envis-

aged to aid in this market's growth during the pre-

dicted period.

Market competition

Overall, the automotive electronics industry in Bul-

garia is highly fragmented, with a lot of foreign man-

ufacturers dominating the market. Still, several low-

cost manufacturers offer economical automotive

parts and accessories. The manufacturers compete

on the basis of price, innovation, quality and perfor-

mance, customer-centrism, brand image, and ser-

vice quality. Key manufacturers in the market also

provide technical support sought by non-residential

end-users at the time of purchase. The competition

is moderate in the market, with the key manufac-

turers focusing on the development and introduc-

tion of technologically advanced products. In the

current issue of South-East European Industrial

Market, we have assembled a market overview with

some of the most prominent manufacturers and de-

signers of automotive electronics and electrical sys-

tems for vehicles.

Melexis Bulgaria

Melexis is a Belgian leading manufacturer of ad-

vanced mixed signal semiconductors, sensor ICs,

and programmable sensor IC systems. It is present

in 12 countries around the world. In Bulgaria, the

company exists as Melexis Bulgaria and was es-

tablished in 2000. Their scope of activities includes

microelectronic component manufacturing, sen-

sors, ICs for the automotive industry. Melexis Bul-

garia ICs are used in the vehicles of companies like

Mercedes-Benz, BMW, Audi, VW, Suzuki, Toyota,

GM, and Ford.

When it was first established in Bulgaria, Melexis

only had a R&D group of 50 professionals develop-

ing chips. Back then, the decision for entry was

based upon the region's history in the electronic

and microelectronic fields, as well as the existing

workforce of professionals with years of gained ex-

perience, knowledge and know-how. Financial pa-

rameters such as the cost of operations and the

Automotive electronics design &

manufacturing in Bulgaria

Favorable conditions

Bulgaria has favorable economic conditions which

have boosted foreign investors' interest in the auto-

motive electronics sector.

• The Bulgarian economy had a constant growth of

above 6% in the period 2000-2008

• The economy stabilized in 2011 with GDP growth

of 1,8% for 2011 and 0,8 % in 2012

• The budget deficit in Bulgaria is one of the lowest

in Europe for 2012: -0,5å %

• There are no currency fluctuations due to a cur-

rency board, introduced in 1997 - the Bulgarian

Lev is pegged at 1,95583 to the Euro

• Bulgaria has the lowest government debt to GDP

ratio in the EU27 in 2012

Source: Invest Bulgaria Agency

Source: Melexis Bulgaria

Source: Pixabay