Serbia’s automotive industry emerged as the strongest contributor to manufacturing growth in 2026, with increased vehicle production in Kragujevac supporting industrial output and export expansion. The recovery has been linked to the start of production at FCA Serbia d.o.o. Kragujevac for the Fiat Grande Panda electric model, followed by the introduction of a petrol-powered version.
According to the MAT assessment, production of motor vehicles and trailers increased 30.4% year-on-year in May 2026, while current output levels were approximately 40% above the previous year’s average. The sector’s performance has become a major factor in Serbia’s industrial recovery, offsetting weaker trends in several other manufacturing segments.
Automotive sector becomes largest manufacturing growth contributor
The contribution of vehicle production to Serbia’s manufacturing performance has increased significantly. During the first five months of 2026, motor vehicles and trailers contributed 2.66 percentage points to manufacturing growth. All other manufacturing branches that recorded positive growth together contributed 1.92 percentage points.
The figures show that the automotive sector has become a central driver of manufacturing expansion at a time when other industrial areas, including basic metals, parts of food processing, certain electronics activities and electricity production, have shown weaker momentum.
Vehicle exports drive manufacturing trade gains
The automotive sector’s importance is also reflected in export performance. Motor vehicles and trailers generated €762.4 million of the year-on-year increase in Serbia’s manufacturing exports during January–May 2026. That represented 74.3% of the total €1.02 billion increase in manufacturing exports during the period.
The sector became Serbia’s largest manufacturing export category, with exports reaching €2.26 billion and accounting for 17.5% of total manufacturing exports. The largest export destinations for Serbian automotive products were Italy and Germany, highlighting the sector’s integration into European automotive supply chains.
Kragujevac production affects broader industrial indicators
The expansion of vehicle production has implications beyond individual factory output. Automotive exports are contributing to Serbia’s industrial production figures, trade balance performance, current-account position and role as a near-shore manufacturing location for European markets.
The stronger automotive trade cycle also coincided with improved trade relations with Italy. Serbia recorded a trade surplus with Italy of €72.6 million, compared with a deficit of €324.7 million a year earlier. The development reflects the growing importance of vehicle production and related industrial supply chains in Serbia’s export structure.
Growth pace faces post-ramp-up challenges
Despite the strong performance, the automotive sector is moving beyond the initial expansion phase. MAT noted that monthly production increases in the automotive industry have been slowing since March 2025, although output remains at relatively high levels. The slowdown follows the launch and ramp-up period of new vehicle production and indicates that future growth will depend on broader industrial development rather than continued increases from the initial production phase. Maintaining momentum will require stronger supplier networks, improved logistics capacity, expanded component production, and stable energy costs.
Supplier development remains key for industrial expansion
The longer-term impact of the automotive sector will depend on whether Serbia can develop a wider manufacturing ecosystem around vehicle production. The Kragujevac industrial base could support growth in areas including plastics, electronics, metal components, logistics, testing, maintenance and industrial services.
A broader automotive cluster would allow Serbia to increase domestic value added, strengthen links between foreign investment and local suppliers, and expand the role of manufacturing exports beyond final vehicle assembly. The 2026 data show that automotive production has become a major factor in Serbia’s manufacturing and export performance, with the sector now playing a central role in the country’s industrial recovery.
