Taking Stock in 2024: Automotive Supply Chains, Value-Added, and a Case Study of the Small Open Economy of Czechia

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Abstract:

What is the actual input exposure of the automotive industry to foreign countries, including China? This paper revisits the traditional question from international trade economics with a newly updated input-output dataset spanning 1995-2020 and a new taxonomy for foreign exposure. We summarise stylised facts on the development of the EU's automotive supply and value chains, adding knowledge on trade in inputs. We find that for the Czech, German, and Hungarian automotive industries, the total input exposure to China through gross trade flows in 2020 is 1.33 to 1.72 times higher than the directly observed exposure and reaches a 5.6% exposure level in the case of Czechia. The value-added input exposure also achieves a steadily growing trend in the observed period and the same significant acceleration within the last two observed years, which aligns with other exposure indicators. Moreover, we show how Czech battery imports weigh on the trade balance with China and discuss the outlook for the Czech automotive industry with an almost non-existent domestic battery industry and its policy implications.