Abstract

Europe remains relevant in the global automotive industry. The Central and Eastern European (CEE) countries’ role is influential: they contribute to European competitiveness through cost-based advantages in a fairly developed technological and business environment. How have the location advantages of CEE evolved and been affected by European integration? How may the changes linked to Industry 4.0 influence location and investment decisions in the industry? With the help of the trade costs concept interpreted in the broad sense, we analyse these changes from the viewpoint of the automotive industry. We show that, as a result of European integration, automotive companies and their suppliers by now consider the whole of the EU as a single, fully integrated space. Then we show how the various elements of Industry 4.0 may transform trade cost components. The results of our analysis are double-checked and supplemented by information gained from companies. Our conclusion is that the enhanced application of the various elements of Industry 4.0 in the practice of companies indeed affects trade costs.