Business Daily – "Small country, auto giant"

Date: January 21, 2026
Host: John Laurenson, BBC World Service

Episode Overview

This episode dives into Slovakia’s remarkable emergence as the world’s leading car manufacturer per capita. John Laurenson explores how a small, post-communist nation of just five million people has become a hub for global automotive giants such as Volkswagen, Kia, Stellantis, Jaguar Land Rover, and Volvo. The show examines the societal, economic, and educational impacts of this boom, looking at both the opportunities and potential risks facing Slovakia’s auto industry future.

Key Discussion Points and Insights

1. Slovakia: The Unexpected Automotive Powerhouse

• Historical Context:
  • Under communism, Slovakia produced basic, unrefined vehicles. The Velvet Revolution and the subsequent split from the Czech Republic brought dramatic change.
  • Volkswagen’s overhaul of Skoda in the 1990s and investment from other major brands catalyzed industry growth.
  • Production Scale: Slovakia currently makes nearly a million cars a year; with Volvo’s new plant opening in 2027, this will increase by a quarter of a million.
  • (01:36) “Now Slovakia makes almost a million cars a year. Extraordinary for a country of 5 million people.” – John Laurenson

2. Inside Kia’s Slovak Factory

• Factory Operations:
  • Located outside Jelina, employing 3,700 locals, with assembly line robots and “an army” of human workers.
  • A car comes off the line every minute.
• Worker Perspectives:
  • Marcel Pukon (48): “I very like. Yeah, from the child. Cars is my passion. And now I am part of the team and I can make the cars. So that's something as a dream work.” (03:26)
  • Simona Caneva (23): Worked in business previously, not her “dream job” but values the community and salary. (04:15)
  • Salaries start around €1,500/month, with Kia quoting an average of $2,800/month.
• Pride and Local Impact:
  • “I like the fact that thanks to that, the production supports our society.” – Simona (04:49)

3. Why Slovakia? (Automaker and Consultant Perspectives)

• Strategic Location and Workforce:
  • “Slovakia is really in the heart of Europe, quite well connected... access to a skilled local workforce and high-quality suppliers.” – Marc Edrich, President and CEO, Kia Europe (07:13)
  • 90% of Kia cars made here are for Europe, with the UK as the biggest market.
• Economic Incentives:
  • Initially driven by low labor costs—20% of German wages in the 1990s; still just 60% today, but with high productivity. (08:44)
  • Proximity reduces lead times and grants access to incentives tied to “production location” like EV grants in France and the UK.

4. Incentives Offered by Slovak Government

• Forms of Incentive:
  • Cash grants (percentage of capital investment), up to 40–50% in some regions.
  • Tax holidays—for 10 years, and R&D deductions.
  • Example: Kia received a $34 million tax credit for a $126 million EV investment (just over a quarter of the cost).
  • (12:00) “In Slovakia, it could go from like 20 to 40 or 50%, potentially. Now Slovakia prefers tax vacation more than cash grants.” – Robert Semoncic, Slovak Investment and Trade Development Agency

5. Impact on Local Communities and Economy

• Massive Employment and Economic Boost:
  • Kia and related suppliers employ 20,000+ locals in Jelina, leading to a huge drop in unemployment and growth in economic strength.
  • Other towns have benefitted similarly via Volkswagen, Stellantis, Jaguar Land Rover, etc.
  • Over 360 parts suppliers feed the Slovak auto giant web; 60% of foreign investment goes to automotive.

6. Education and Skills Pipeline

• School and University Programs:
  • Kia sponsors dual education at Jelina Technical School: students rotate between school and factory work.
    • “I thought it will be cool, you know… you help the maintenance workers… something gets broken every day so you learn something new.” – Richard Havada, student (14:56–15:57)
  • Jelina University, originally founded for transportation studies, is now a top Slovak technical school.
    • “Definitely they can expect a job after they graduate. Slovakia is an industrial country… Two vice presidents of KIA nowadays are graduates of Zhilina.” – Josef Ristvey, vice rector (17:06)

Notable Quotes & Memorable Moments

• On Transformation:

  • (01:36) “When this East European country was part of the Czechoslovak Socialist Republic, the cars it made... were, by Western standards, poorly finished, noisy, thirsty and slow. But after the Velvet Revolution... Volkswagen bought and overhauled the old Czechoslovak carmaker Skoda and other... manufacturers started investing here too.” – John Laurenson

• On Local Pride:

  • (04:49) “Yes, I'm proud of that. I like the fact that thanks to that, the production supports our society.” – Simona Caneva

• On Competitive Edge:

  • (07:53) “Producing closer to your customer is always an advantage… New developments in Europe [mean] you are not eligible for the electric car grant in the UK or eco score in France unless you produce in Europe.” – Marc Edrich

• On Education’s Role:

  • (17:06) “Our students are really prepared for industry… we have one saying at the university that you can make a manager from a technical guy, but you never make a technical guy from a manager.” – Josef Ristvey

Important Timed Segments

• 01:16–01:58 – Setting the scene and reflecting on Slovakia’s car industry transformation
• 03:26–04:49 – Factory floor interviews: worker pride, pay, community
• 06:12–07:48 – Kia management: why Slovakia, market focus, production scale
• 08:59–09:57 – Expert analysis: wage gap history, productivity
• 10:48–12:33 – Local government and investment incentives
• 14:28–15:57 – Dual education program and factory pipeline
• 16:43–18:06 – Jelina University, technical focus, direct career pathways
• 18:06–19:45 – Regional expansion, potential challenges (EV transition, automation risks), pride in achievement

Big Picture: Opportunities and Risks

• Slovakia’s rise combines low costs, strategic location, industrial tradition, and educational alignment with global auto market needs.
• Risks:
  • Overexposure to the EV market if transition lags elsewhere.
  • Automation and AI may erode wage advantages—the very edge that drove initial growth.
• For now, however, Slovakia stands as a small country punching far above its weight in global auto manufacturing.