T

he automotive industry employs around 12 million people in Western Europe today. But will it tomorrow, or in four years?
   Probably not.

Magna Steyr's newly expanded 8.6- million- sq.-ft. (800,000- sq.-m.) complex in Graz, Austria, employs 9,800 and features two paint shops, four manufacturing shops, a prototyping shop, an engineering center and a test track. Production of the Jeep Commander started in January 2006.

   The industry still plays a critical role in driving the economic fortunes of western European countries. But today, increasingly, it is the Eastern European nations that are feeling the force of the automotive juggernaut. Analysts anticipate that 20 percent of Europe's new car output will originate in Central and Eastern Europe by 2010.
   Much of the anticipated growth will come not from financially battered U.S. and European carmakers, as we've seen in the recent past. Instead, Asian automotives are the protagonists in this latest episode of the ongoing global automotive location drama. The big stars in the drama: Korean automotive companies, which have experienced unprecedented sales growth in Europe and are busy setting up new plants to feed the seemingly insatiable demand.
   Toyota's fortunes continue to rise as well. Some estimates suggest that Toyota will more than double its European capacity in the next seven years – a 60-percent increase in output. The company is expanding in the Czech Republic, Poland and the north of France. Toyota plans to invest US$12 million in a new parts depot in the Czech Republic as well. The Japanese manufacturer also just announced a new facility in St. Petersburg, Russia.
   "Toyota is the leading automotive investor in Europe right now," says Roel Spee, head of European operations for IBM's site selection consultancy Plant Location International. "They are still investing strongly with new capacity," unlike American companies, he adds.
   By contrast, the European car makers are decamping to Asia, where consumers are embracing the prestige of owning BMWs and Mercedes-Benzes.