This year, we will introduce a Tatra with alternative propulsion, says its CEO Lukáš Andrýsek

Shareholders have tasked you with increasing production because demand for Tatra trucks exceeds your current production capacity. Large car manufacturers produce tens of thousands, even hundreds of thousands of vehicles. Why is it difficult for Tatra to increase production by hundreds of vehicles per year?

Tatra operates in the market as a manufacturer of special vehicles, which are often made to measure for specific customers. It is not mass production. The setup of the supply chain is significantly more complex for this type of production. This can be demonstrated by an example: While large manufacturers with tens of thousands of vehicles per year have cars divided into only a few product lines, Tatra is working on 600 different project documentation for vehicles this year alone. This shows the breadth of modifications for individual customers.

How many vehicles do you plan to produce this year and how should production increase in the coming years?

According to the official plan, we are to produce 1,700 vehicles this year. To meet customer requirements and satisfy market demand for Tatra, we should reach 2,500 vehicles per year within three years. Growth will not be linear, next year's target is 1,900 vehicles, and in 2025 we want to get significantly above 2,000 vehicles.

Can the issue of increasing production capacities be addressed by partially transferring production abroad? After all, there are precedents: You led DAKO-CZ, which established a joint venture in India, and Tatra has previously transferred production to Saudi Arabia.

When we talk about a production volume of 2,500 vehicles, it should be said that this number does not include so-called CKD kits. These are Tatra chassis that are sent as kits to other assembly plants abroad. There are countries, such as India, where you simply cannot serve customers without significant localization of production. So, the goal is to produce 2,500 vehicles in Kopřivnice and also a certain number of CKD kits.

For several years you led DAKO-CZ, a manufacturer of braking components for rail vehicles. How does the business in rail differ from the automotive business, or in that specific segment where Tatra operates?

The management doesn't really care whether the company manufactures components for rail vehicles or for trucks. For me, the parallels between both companies, DAKO-CZ and Tatra, are more interesting. These are two traditional engineering companies, in which machining dominates and which produce a highly complex product.

A significant part of the production is self-sufficient, after all, Tatra is the only car manufacturer that produces the chassis, engine, and cabin in one place, but at the same time they have significant suppliers. Both companies fight in the markets with competitors who are a hundred times larger. After my first month at Tatra, I can say that both companies have a lot in common. The specificity of Tatra is that it deals not only with civilian orders but also has a significant share of orders in defense and fire services. This was not the case with DAKO-CZ.

The question, which I know is not to everyone's liking in Tatra, but enthusiasts keep asking: Is the production of personal vehicles in Tatra really a closed chapter? Isn't there room in the market for small-scale production of some design delicacies in the field of personal vehicles, which Tatra would give its brand?

Here I want to tell Tatra enthusiasts and our people, who have a relationship with Tatra, unequivocally that it is very difficult to return to the production of personal cars with combustion engines, even in small-scale production. Although it may seem terrifying for fans of classic Tatras, the shift to electromobility could open the way to return to the personal vehicle segment in some form. The path through combustion engines is closed due to demanding homologation and European regulation.

Producing a car with a quality interior and all the mandatory elements of electronic equipment is a huge challenge. Compared to that, the complexity of an electric car, especially in a situation where you can get an electric motor and battery as a set, is significantly lower. After the first month in Tatra, I can say that the electric mobility path would not be futile for personal cars. Maybe in a year we will be further in thinking.

You also worked in Hyundai in Nošovice. Can you explain in layman's terms what the difference is between Tatra and a mass carmaker like Hyundai?

The basic difference, which every visitor sees after a tour of the production, is the mass production. During my time in Nošovice, 1,300 cars were produced every day. In such type of production, everything is set to a rhythm, and modular production allows the vehicle to go through the entire factory in one and a half days. In the case of Tatra, the number of standard hours per car is significantly higher, the product is much more complex. Tatra once produced 15,000 vehicles a year, but these were unified types produced in large series.

Tatra's strategy is to cover a certain niche in the market. Is the world market really capable of consuming 2,500 Tatra chassis per year? Or even more?

I am convinced of this and we clearly see that in those segments where Tatra is developing, where it is successful, customers return for repeat purchases. I am a realist: Part of the demand was caused by the change in the situation due to the war in Ukraine and the realization of European governments of how important the defense industry is. But this extraordinary demand will be here for many years to come.

There are two shareholders in Tatra, CSG and PROMET GROUP. What is the cooperation between them actually like and how does it affect you as CEO?

Although it may not seem so, I experienced a similar situation at DAKO-CZ. The company had two shareholders for a long time. So nothing new for me. In the case of the Tatra partnership between CSG and PROMET GROUP, these are shareholders who cooperate, share the same visions, and that is essential for me.

What are Tatra's key contracts and markets this year? And where would you like to grow in the coming years? Where do you see a demand for 2,500 vehicles?

In 2022, we secured the most significant order: 879 logistics vehicles for the Belgian army. This year, we continue to fulfill it. We are also gradually fulfilling orders for our esteemed domestic customer, the Czech Army, where we signed contracts for a total of 289 vehicles last year.

For the Czech Army, we also supply chassis for armored vehicles TITUS, STARKOM electronic warfare system, or the Spyder air defense system. Then there's my favorite segment, firefighters, where we deliver, for example, 77 firefighting specials together with Rosenbauer to Germany, and 110 for firefighters in the Czech Republic. In the civil vehicles, the largest volume of deliveries this year will be to Australia for the mining industry; we will export more than 70 vehicles there.

Tatra traditionally supplies its chassis to two segments: civil and military, or better said, security. What was the ratio of these two segments in 2022, and what does it look like this year? Does the conflict in Ukraine mean any shift in favor of the military segment?

In 2022, 40 percent of deliveries went to the civil segment, 10 percent to firefighters and rescuers, and half to the defense segment. As an interesting fact, we also delivered firefighting specials to Ukraine, and the local firefighters want more Tatras. I hope that in better times, Tatra vehicles will contribute to its peaceful reconstruction.

What technological innovations do you want to introduce?

We are facing a significant thing, the introduction of a new generation of our key type series, namely FORCE, which primarily serves soldiers and firefighters, and PHOENIX, with which Tatra mainly serves the civil segment. The new, third-generation FORCE series will have an improved chassis and, most importantly, a cabin with a completely redesigned interior and modern electronic equipment.

New Tatra engines with electronically controlled injection will also be available, which in perspective can be powered by hydrogen. Overall, the new generation FORCE is also optimized for emission-free propulsion. The new Tatra PHOENIX will also have a new cabin from our partner DAF and modernized PACCAR engines. At the end of 2023, Tatra will present the first prototypes powered by electric motors.

You have been with Tatra for a short time. Is there anything that surprised you as a CEO?

I was surprised by the employees, the Tatra workers, their tremendous will and loyalty to the factory. This was cultivated also due to the problems and crises that Tatra has gone through since 1989. I appreciate people who didn't give up and fought for the survival of the company. On the other hand, this also entails a certain closeness because people were used to the fact that nothing good ever came from outside.

How do you evaluate Tatra's financial results last year (bearing in mind that you were not yet the CEO at the time)? And what is the outlook for this year?

Last year, Tatra generated just under 7.5 billion CZK with a half-billion EBITDA. This is a very decent result, but the profit was negatively affected by inflation and uncertainty in the supply chains due to the war in Ukraine. This will also reflect on this year's results, as it takes some time before the higher input costs fully reflect in the final prices of vehicles. For this year, I am somewhat tempering expectations regarding profits. We are facing more of an investment and development year.

In addition to the financial results, it is appropriate to recall that in 2022, Tatra provided excellent service to firefighters during the fight against the fire in the Czech Switzerland, where we provided on-site intervention and mobile service. I am proud of that.

Tatra also involves taking care of its tradition and building museum exhibitions. Is there something new that fans of your history can look forward to? Or after the renovation of the Slovak Arrow and the opening of the new Truck Museum, has Tatra fulfilled its mission in this area?

Certainly, I will also continue to take care of the tradition and brand of Tatra. I see it as if we have fulfilled our debt to fans of trucks by opening a new museum, and now we should focus on passenger cars. The next goal is the renovation of the existing Museum of Passenger Cars, which is planned for next year.

Last year, Tatra carried out a recruitment campaign called "We are looking for 500 Tatrovaks". Do you plan to hire new employees this year as well?

There is a significant generational change going on at Tatra. We need to replace outgoing employees with younger colleagues. I would be glad if at the end of my era at Tatra it could be said that Tatra is a company for the young. On the other hand, we want to invest in technologies to be able to increase production with the current core of employees. Therefore, we do not plan massive recruitment actions.