Turkish-owned automotive supplier Teklas Automotive is advancing plans to expand rubber processing at its industrial complex in Vladičin Han, southern Serbia, as revenue at its Serbian legal entity rises to €151.6 million and the company seeks greater integration across its manufacturing operations.
- New Facility to Integrate Rubber Processing
- Existing Industrial Operations Continue to Expand
- Revenue Growth Improves Operating Performance
- Automotive Supply Chains Drive Demand for Specialised Components
- Domestic Processing Could Increase Industrial Value Added
- Energy Use and Environmental Compliance Remain Relevant
Serbia’s Ministry of Construction, Transport and Infrastructure has issued location conditions for the reconstruction and conversion of an existing warehouse in Lepenica into an industrial facility producing EPDM rubber compounds used in reinforced automotive cooling hoses.
The project would integrate material preparation with existing production lines, linking rubber compounding with extrusion, reinforcement, vulcanisation, finishing and final assembly. The investment value, processing capacity, additional employment and commissioning schedule have not been disclosed, and the issuance of location conditions does not confirm that construction has started.
New Facility to Integrate Rubber Processing
The planned facility will manufacture EPDM-based rubber compounds, rather than finished automotive components. After mixing, the material will be transferred to an adjacent production facility for further processing into reinforced cooling hoses.
Rubber formulation and mixing quality influence the finished products’ flexibility, temperature resistance, durability and chemical compatibility. Integrating these stages could improve process control, reduce internal logistics requirements and provide greater flexibility in production scheduling. Project documents do not establish whether the new operation will replace externally sourced compounds or support additional production volumes.
Existing Industrial Operations Continue to Expand
The investment follows a separate project for which local authorities issued a construction permit for the extension and adaptation of production buildings in Lepenica. That development includes approximately 1,981 square metres of additional gross floor area, covering production and supporting facilities.
Teklas began manufacturing in Vladičin Han in 2016 through an initial investment of €11.35 million, supported by approximately €4.7 million in government incentives. The company subsequently expanded its presence in southern Serbia and opened a factory in Vranje in 2022, producing fluid-management systems for conventional, hybrid and electric vehicles. The latest plans build on this established manufacturing base, with a focus on integrating additional industrial processes rather than relying solely on expanding final assembly.
Revenue Growth Improves Operating Performance
Teklas Automotive’s Serbian legal entity recorded approximately €151.6 million in revenue, up from €107.4 million in 2024, representing growth of more than 41%.
Employment increased from 1,806 to 2,028 workers, while earnings before interest, tax, depreciation and amortisation improved to approximately €6.4 million. The resulting EBITDA margin was around 4.2%.
Despite the improvement, the company reported a net loss of approximately €377,000, compared with a €6.6 million loss in 2024. The financial statements also showed current assets of approximately €69.3 million against short-term liabilities of around €74.9 million, resulting in a current ratio of approximately 0.93. These figures cover the Serbian legal entity as a whole, not the Vladičin Han facility alone.
Automotive Supply Chains Drive Demand for Specialised Components
The investment comes as vehicle manufacturers adapt supply chains to electric and hybrid models while continuing to produce conventional vehicles. Fluid-management systems remain important across different powertrains, including cooling and heating circuits and thermal-management applications for batteries and power electronics.
For suppliers, consistent material properties, product traceability and reliable performance under temperature, pressure and vibration stresses are essential. Greater control over rubber preparation could help Teklas respond to customer specifications and reduce variation between production batches. Automotive suppliers continue to face cost competition, changing demand and expenditure associated with electrification. Higher production volumes must be accompanied by effective cost management and reliable operating margins.
Domestic Processing Could Increase Industrial Value Added
Expanding rubber processing in Serbia could increase the share of manufacturing activity carried out within Teklas’s local operations. Potential supporting activities include equipment maintenance, industrial automation, process engineering, laboratory testing, packaging and logistics.
The extent of the domestic economic contribution will depend partly on procurement arrangements. Local processing does not necessarily mean domestic sourcing of raw materials: EPDM polymers and specialised additives may still be imported, depending on supplier qualifications, pricing and availability.
Developing additional engineering and materials-processing capabilities could provide a broader industrial contribution beyond component assembly, although the project’s precise effects on local sourcing and employment have not been disclosed.
Energy Use and Environmental Compliance Remain Relevant
Rubber compounding requires specialised mixing equipment, temperature control and industrial ventilation. Energy consumption, equipment reliability and waste management will therefore influence operating costs and the investment’s eventual returns.
Adapting an existing warehouse may limit some construction requirements compared with a new-build facility, although potential savings cannot be determined without project budgets. The operation will also need to address applicable requirements for process emissions, industrial waste, chemical handling and workplace exposure.
European automotive manufacturers increasingly request information on upstream material emissions, energy consumption and supply-chain sustainability. Although finished rubber hoses are not among the principal product categories directly covered by the EU Carbon Border Adjustment Mechanism, reliable environmental and production data can remain relevant to supplier assessments.
The commercial outcome will depend on whether the additional processing capacity improves productivity, reduces procurement costs and strengthens operating cash flow. With revenue approaching €152 million but profitability still constrained, Teklas’s expansion will test whether deeper manufacturing integration can translate growth into sustainable earnings.
