Transformation of the Czech automotive components industry through foreign direct investment

This paper traces the profound restructuring of the Czech automotive components industry during the 1990s and early 2000s through foreign direct investment (FDI), and the integration of Czech-based suppliers into European and global automotive supplier networks. The magnitude of change is highlighted by an initial characterization of the Czechoslovak state socialist automotive components industry prior to restructuring. The paper then focuses on the effects of price and trade liberalization and survival strategies employed by component suppliers during the early 1990s. It subsequently illustrates the effects of Volkswagen's investment in Skoda (a Czech passenger car maker) on Skoda's supplier network and the strategies employed by VW-Skoda to rapidly improve the quality of supplied components while keeping their prices low.