Serbia Paid 652 Million Euros in Car Parts Subsidies
Of 292 state investment contracts signed since 2016, 74 went to auto parts manufacturers, worth about 652 million euros combined, according to Serbia's Ministry of Economy and Development Agency.
Since 2016, Serbia has signed 292 investment incentive contracts, and 74 of them belong to auto parts manufacturers. Those 74 contracts commit roughly 652 million euros combined, according to data from the Ministry of Economy and the Development Agency of Serbia (RAS), of which more than 517 million euros has already been paid out. Some tranches from more recent contracts have yet to reach company accounts.
Most individual contracts were signed with companies of German origin, followed closely by companies from China, including Hong Kong and Taiwan. The auto components manufacturing sector in Serbia employs about 100,000 people.
Who received the latest incentives
In 2026, four companies of Chinese origin received a combined 40 million euros in new incentives. BMTS got 3.34 million euros, Minth Automotive Europe in Loznica received 17.3 million euros, Minth Metal Parts Balkan in Majur got 11.6 million euros, and Xingyu Automotive Lighting Systems received 8.2 million euros. The subsidies cover the production of automotive electronics, cables, seat components, tires, turbochargers and decorative parts.
BMTS began production in Novi Sad in 2020, when it received 4,179,746 euros to build its turbocharger plant. The new 3.34 million euro incentive is for a project to automate the production of electronic and electrical equipment for motor vehicles. Minth Automotive Europe in Loznica had previously received 7.84 million euros in 2020 to build its factory in the Sepak industrial zone, an amount that has been paid in full, followed by a second contract worth 23.5 million euros in 2024 for the plant’s second construction phase.
Besides these four companies, Janfeng, Meitai, Lianbo, Johnson Electric, Spintek, Sensata Automotive Parts, Yusei and Linglong, whose plant is in Zrenjanin, also operate facilities in Serbia. In late May, representatives of the Serbian government signed commercial agreements in Beijing that were announced to bring more than 953 million euros in investment and nearly 1,700 new jobs. New investments by Linglong and Yusei were among those announced, without individual amounts specified per company.
Incentives for auto parts production are not limited to Chinese firms. German companies Leoni, Brose, ZF Serbia, Continental and Vorwerk have also received them, as have Italy’s Fiat and Japan’s Nidec and Toyo Tire. Four contracts were signed with ZF Serbia, which operates a plant in Pancevo, between 2019 and 2022, under which 30.8 million euros has been paid out, while the company is still awaiting the remaining 38 million euros for a driveline electronics production center. Aumovio, a company spun off from the Continental group with a plant in Novi Sad, has received 51.7 million euros to date, and the Vorwerk group in Cacak has received 7.5 million euros through three contracts.
Why these companies get subsidies
RAS, the government agency that supports investment, says investment incentives have become standard in this sector because auto parts production for original equipment runs on thin margins, with suppliers under constant pressure from carmakers to cut prices.
“Established European carmakers are currently facing serious price pressure from Chinese companies rapidly entering the European market, which in turn increases the pressure on suppliers as well,” RAS said in a written response. The agency adds that foreign companies generate about 95 percent of the sector’s revenue, while domestic firms, which make up about 40 percent of the total number of companies, are mostly small and medium sized enterprises.
Branimir Jovanovic, an economist at the Vienna Institute for International Economic Studies, believes Chinese companies see Serbia as an entry point to the European market.
“The Chinese see Serbia as a gateway to the European market. Chinese companies BYD and CATL are opening factories in Hungary, which serves as their ticket into the EU. And Serbia, as a country bordering Hungary, is very convenient for supplying those factories, and potentially other European car manufacturers as well, since there has lately been more and more talk of European manufacturers wanting to use Chinese components.”
Jovanovic adds that there is also a political reason behind the choice of Serbia.
“Serbia has good relations with China, and that matters quite a lot to the Chinese, because the risk of sanctions is lower,” he says, noting that Chinese companies are far clearer and more strategic in their decisions than domestic partners.
Do the subsidies pay off?
Jovanovic does not dispute the principle of incentives, but says Serbia lacks a strategy. “There is no clear plan for developing the automotive industry, no explanation of why these particular companies are being subsidized,” he says, adding that incentives would be justified if they targeted technologically advanced firms capable of cooperating with domestic companies and universities.
As an illustration of the limited effect of Chinese investment, Jovanovic points to the mines in Bor: “Only 15 percent of the added value stays in Serbia through wages and taxes, while 85 percent ends up as the owner’s profit.” He stresses that he is not against foreign investment, including Chinese investment, but believes the choice of companies should be strategic rather than, as he puts it, driven by day to day political needs.
RAS, for its part, says a country that does not offer incentives has no chance of attracting investment projects in competition with regional states, including Bulgaria, Romania, Hungary, Slovakia, the Czech Republic and Poland, which run similar programs. According to the agency’s data, about 160 active companies producing auto parts currently operate in Serbia, with most of the output going to Germany, Hungary, the Czech Republic, Slovakia, France and Italy, countries with developed automotive industries nearby. The largest exporters of auto parts from Serbia, according to RAS data, are Germany’s ZF, Bosch and Aumovio, France’s Michelin (operating as Tigar Tyres), China’s Minth and South Korea’s Yura.
Our newsroom reported in late August on the signed agreement for a battery factory in Indjija, an investment worth 100.5 million euros, which fits the same pattern of attracting foreign manufacturers into the automotive industry’s supply chain.
