Created: 11/1/1967

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LIBRARY Mandatoryfi-



Recent Developments

in the Production of Passenger Automobiles in the European Communist Countries

Copy No. JJ_


Mogn Dissem

CENTRAL INTELLIGENCE AGENCY Directorate of Intelligence


-Recent Developments in the Production

of passenger Automobiles

in the European Communist Countries


The European Communist countries,*relative inferiority of theircalling on the developedthe wist to help expand their Contractswi 11

result inillion

worth of machineryinadom firms in Italy, France, and the United Kingdom

expected to obtain the lion's share of the hSiness Deliveries of automotive equipment from ?ne United States probably will not greatlyillion.

Annual productionommunist6 is exoected toillion0 total registrations should reach about 5


- The USSB, Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, Rumania, and Yugoslavia.

Hote: This memorandum was produced by by the Office fl i

the ^estimates and conclusions represent the best judgment of the Directorate of Intelligence as of

FosJerTgn Diss

provide greatly increased amounts of passenger car transportation for government and industry. Only in East Germany and Czechoslovakia can the average consumer realistically contemplate the ownershipar, and even in these countries long waiting lists, large downpayments, and inadequate services will remain the rule. East Germany, the Communist country with the highest number of automobiles per capita, expects to have one passenger car for everynhabitantshe level attained by the United States

The contract6 between the USSR and Fiat of Italy proved to be the first of several contracts concluded by the European Communist countries with Western European firms for the purchase ofplant and technology. Recent contracts with Western firms will enable Rumania to assemble automobiles for the first time and the USSR, Poland, Bulgaria, and Yugoslavia to expand greatly their automotive facilities. Much of the new equipment will be used initially to assemble vehicles from imported parts. East Germany and Czechoslovakia, the two most experienced producers of automobiles among the Communist countries, also plan to expand production, butlower rate and essentially from existing resources. Only Hungary has no current plans for the domestic production of automobiles, but it has contracted to increase its imports sharply. (For the production of automobiles in the European Communist countries S, , and estimated production, see

The decision to initiate automobile assembly in the smaller Eastern European countries and to expand it in the other countries i* economically sound. It will permit savings in "oreign exchange, will help to satisfy the growing demand forand probably will result in lower costs per unit. However, if the smaller countries persist in their plans to dovelop,heir own automotive industries that are based on domestically produced parts rather than on imported parrs, much of the economic advantage probably will be lost. The current plans of most of the smaller countries callevel of production that would be too low for economic efficiency. The few plants that already are producing automobiles from

domestically produced parts are not operating at an efficient level of output, although theCommunist price structure permits them torofit. There may be some increase in efficiency, however, if more agreements are reached on international specialization in the production of automotive parts, such as the agreementrecently among Yugoslavia, Poland, and Fiat. The investment required in all the countries for new plants and service facilities will continue toery small part of totallthough pressures will mount durings to put substantially more resources into the automotive sector.

The Lagging Automotive Sectors of the European Conpunis* Countries

European Communist countries theis far from the family necessity itin the developed countries of the West.

Inhere was one passenger car foresidents in East Germany, one car foroviet residents, and only one car foresidents in Rumania, By comparison, there was one passenger carersons in the United States and one foroersons in France, West Germany, the United Kingdom, and Italy, (for comparative data on regietration and population, see Moreover, many of the passenger automobiles in the European Communist countries are owned by government units or industrial institutionsfor example, in the USSR about one-half of the passenger cars are owned by government and industry.

problems faced by thethe European Communist countries arcof construction, lack of spare parts,service stations and repaira result, many cars are out of operationperiods of time, and many others that arerunning condition are used onlybuyers are discouraged by highdownpayments, and long waiting times These problems are endemic oven inand Czechoslovakia, where automobilesin currently operative plants as farin thes.

citizens in the Europeanmustum equivalent to two towages for an automobile that isfrom the government, and they mustmore in the black or grey markets thatbetween individuals. In contrast,worker in the United Kingdom, Westand France couldopularproduced car of higher quality with only

7 toonths1 wages The average US workerarger, more powerful automobileost of six months' wages. (for data on com* parative earninge and automobile pricee, eee

Passenger Car Registrations and the Somber of Persons per Passenger Car in the European Commmist Countries and Selected Western5

a/ (Thousand)

Number of Persons per Passenger Car

Communist Country


Czechoslovaki a

East Germany








Greece Italy

United Kingdom United States West Germany


There are reports thatast Germans were on the waiting listnd in Czechoslovakia7 waiting list for automobiles contained nameseople. East German, Czechoslovak, Hungarian, and Bulgarian residents usually must wait two to five years for delivery after the order is placed, and residents of other European Communist countries rarely wait less than six

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months. Only the few professional and theatrical people who travel and work in the West andWestern currency can buy Western cars without waiting. izable downpayment is required in all the countries, amounting to the entire purchase price in Rumania.

4. evere shortage of cars at home, Czechoslovakia, the USSR, and East Germanyarge share of the automobiles they produce. zechoslovakia0 passengerercent of6 theercent) and Eastercent). Most of the trade is among the European Communist countries themselves, although Austria and West Germany are important customers for Czechoslovak passenger cars. Imports of Western automobiles are increasing, especially in Hungary,ombination of highhortage of Western exchange, and political considerations keep Western imports very low. (Imports and exports of

automobiles by the european communist countries for there shown innd

Progress in the Soviet Automotive Program

5. The USSR has taken najor steps to enlarge and upgrade an automobile industry thatnowledgeable observer5 as incredibly archaic and inefficient. In6 an agreement was concluded with the Italian firm of Fiat for the construction in the USSR of an automobile plant with an annual capacityars. The USSR signed an agreement with the French firm of Renault in6 for equipment and technical advice to expand theof the moekvich, the most popular model currently produced. Present Soviet plans call for the annual productioncarsore than three times the production (for production of passenger care in the european communiet countries in, and planeee The decision to increase automobile productiona sharp turn away from Khrushchev's emphasis on public transportation. The leadership has opened up the possibility that Soviet consumers, who are becoming better supplied with refrigerators,machines, and television sets, will eventually own family cars. The present plans for automobile expansion are probablyirst step in this direction, however, and the planned investment in manufacturing facilities willery small share of total investment for the next few years at least. In the longer term, it is almost certain that consumers will demand more automobiles and better service and that pressures will build up to devote more resources to this indu try.

he Fiat plant, to be constructed in Tol'yatti and called the Volga Automobile Plant, will cover an area ofcres, slightly more than the area of the Ford River Rouge Plant near Detroit. The USSR announced in7 that0 people were working at the site;

foundations had been poured for the body-manufacturing and paint shop, which has an area ofillion square foet, orcres;

a large concrete plant was near completion;

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(d) iles of roads and railroad sidings were laid; and (e) morequare feet of housing had been completed. Power lines had been laid to the area byndion since then has begunile branch gas pipeline from Central Asia. Investment in the plant is planned to be moreillion rubles by the endmarked" increase in planned investment is reported for next year. Nevertheless, the usual Soviet constructionare in evidence. There have been delays in the receipt of technical specifications and shortages of cranes, concrete, and personnel. Damage causedecent severe storm added to the delays. The USSR apparently has refused Italian assistance until the final stages of assembly of the equipment, thereby missing an opportunity to speed up the project. Past experience with Soviet construction projects suggestselay of two to three years in reaching commercial production is not unlikely.

officials estimate that thealready at least six months behind thewhich called for thears The slow progress may

be due primarily to delays in completing Final agreement on the layout of the plant equipment and on the technical specifications for the automobile to be produced was not reached untilo the dissatisfaction of both the USSR and Italy. This delay in turn postponedto determine the final composition of the equipment to be ordered in Italy and third Whether or not the Volga plant is completely equipped on schedule, it is possible and even likely that Fiat cars will be produced from its assembly lines0 by using parts and assemblies imported from Fiat plants in Italy and Yugoslavia (see Moreover, Fiat apparently is still negotiating to export to the USSR up0 automobiles annually, presumably until the Volga plant reaches planned capacity.

first contract for equipment forplant was awarded in7 toCompany of Milan, which willetalforming presses valued


million and produced under OS license. The USSR will almost certainly want to purchase gear-cutting machines from the Gleason works of Rochester, New York, and crankshaft grinders from the Landis Tool Company of Waynesboro, Pennsylvaniaeven though credit from the Export-Import Bank is not available. Moreover, other specialized production equipment is likely to be purchased in the United States if private financing can be arranged. The total -value of equipment to be ordered in Italy and third countries for the Flat plant is expected to4oercent of which probably will be ordered from firms in the United States.

9. There have been conflicting reportsSoviet plans for production of the Moekviah, but it now appears that the USSR intends to increase the annual production from070 and to as manyhortly thereafter. The horsepower rating of the Moekvich will be increased fromo betweenndorsepower by The USSR signed two separate contracts with the Gleason Works in January and, each valued at S3 million and each for the supply ofleason bevel gear-cutting machines for the Moekvich program. The first order was for the existing Moakvioh plant in Moscow, andprobably have already begun. The second order is for additional facilities now undernear the existing plant, and shipment tentatively is scheduled for, pending the issuance of export licenses by the USof Commerce. The two orders are adequate for the annual production of gears forutomobiles plus spare parts.* Renault willFrench machinery, materials, and engineering

^ One recent Soviet reportotal anticipated annual production ofoekvichee from the facilities in Moecow, and other Soviet reports have indicated an annual production of Moekvichee not in exoeeenits. These reports probably do not include the assembly of Moekvicheeew plant in Izhevsk, which assembled its first'g in6 and is soon to begin assembly of thelightly modified and moremodel.


know-how for the renovation and expansion .of the existing Moekviah plant and probably will assist in the construction of the new facilities. Another contract callsive-year, extendablefor scientific and technical cooperation in automobile research between the USSR and the two French firms, Renault and Peugeot. The USSR also hasillion worth of machinerom British firms and is negotiating.for the purchase of additional machine tools valuedillion. Most of these tools, as well as dies and other equipment recently ordered in Western Europe, probably will be used in the Moekviah facilities.

Soviet consumer will not be limitedbetween the Tioekvioh and the Fiat. Motor Vehicle Plant (GAZ) willproduce the five-passenger Volga, or ait. Annual production of the Volgathe neighborhood0 cars, many

of which are allocated to the Soviet taxi fleet. The newest model in this line is the roomier and more powerfulhich is scheduled for introduction. It will be the largest car available to the general public. The production of the Zaporoahete, smallest and least popular Soviet car, is planned to increase00. Moreover, it isto be restyled, to be improved in quality, and to have its power increased fromoorsepower. The USSR has also announcedew model, the ZIMA, will be produced by the Izhevsk Motor Vehicle Assembly Plant in addition to the Moekviah. The Soviet motor vehicle industry produces two cars that are not available to the general publicthe ZIL-lll (soon to be replaced by thend the chaika, both eight-passenger limousines. IL limousines are produced each year by the Likhachev plant in Moscow. The ZIL, the most luxurious Soviet car, embodies much handwork and is allocated for officialto officials of the highest rank. The Chaika, of which GAZer year, is also allocated for high-level official transportation.

The Soviet Automotive Outlook

the USSR probably will notgoal for the production



passenger carst maynnually by thenillion The stock of automobiles in the USSR5 couldillion (about one car for everyesidents) compared withillionn outputillion passenger cars5 is based on the assumption that production will be near-rated capacity at the new Fiat plant, that there will be substantial increases in production at the Moskvich and Zaporozhye facilities,production at the new Izhevsk facilities,mall increase at the Gor'kiy plant. Work is under way at all these sites, and, even with the usual delays in Soviet construction and in the start-up of operations, the new plants should be producing at near the designed rate by thes. Soviet press coverage of the Fiat contract and other automotive developments has beenhowever, suggesting that the regime wants to hold down consumer expectations. Automobiles will continue to be scarce in the near future and available only to the relatively prosperous or politically favored* There appears to be inadequate planning for service facilities, and it is unlikely that their growth will keep pace with passenger car production or with the needsrowing tourist trade. At the same time, the market forin the Convminist countries is so great that there is little prospect the USSR will attempt to export large numbers of cars to the Free World.

Recent Developments in Eastern Europe

12. Several Eastern European countries have followed the lead of the USSR in contracting for Western assistance in the manufacture of Only East Germany and Czechoslovakia, where highly developed automotive sectors exist, have not signed important contracts with the West since (Czechoslovakia had purchased equipment for the manufacture of passenger cars from Western European firms) Hungary has no current plans for domestic production in the near future, but it has contracted to increase its imports of passenger cars sharply. The Eastern European countries also are expanding theirservices sectors, often with Western help, for the benefit of both the growing number of

domestic motorists and the rapidly increasing number of foreign tourists. (For photographs andof models of automobiles ourrently produced in the European Communist countries and those models to be produced in the future, seend Z. For planned production of paeeenge carey model, see


production of automobiles0 is planned to be aboutprimarily Western models, andplanned to. 6 the(Red Flag) plant in Kragujevac reached

an agreement with Poland and Fiat under which Yugoslavia and Poland will cooperate in theof00 automobiles. ugoslavia will be0 cars under this agreement. In the first stages of the agreement, Crvena Zastava will supply Poland with parts, and Poland will supply Crvena Zastava with semifinished material. The value of material deliveries is expected to0 million by Zastavaethe Yugoslav name of Fiat models produced4 Italian licensesaccount for most of the current production of automobiles in Yugoslavia.

ugoslav automobilecompleted negotiations with thefirm of Simcaimcato be built in Split, but this agreement

is still awaiting approval by the Yugoslav The plant will have an initial annual capacity0 automobiles. Belgrade radio has reported that Yugoslav Inter-export and"have agreed on the principles of anfor tho constructionolkswagen assembly plant in Yugoslavia. This plant is supposed to have an initial annual capacity0 vehicles (of which0 will be passengernd most of the output will be exported.

USSR and Yugoslavia currentlycooperation in the production ofwith Yugoslavia supplying parts,electrical equipment to the USSR in return for

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other parts, finished vehicles, and other products. Prospects for success are favorable becausehas extensive experience in the manufacture of Fiat vehicles. Yugoslavia is also negotiating for technical cooperation with the Skoda plant in Mlada Boleslav, Czechoslovakia, and has started discussions with Bulgaria on cooperation in the automotive field. * Yugoslavia, the United Arab Republic, and India agreedormutomotive cooperation that calls for Yugoslavia to specialize in the production of0 andutomobiles, the UAR in trucks and buses, and India in motors fore. (The logical interpretation of this agreement is that Yugoslavia and the UAR will import Indian engines for their0 production, the UAR and India will importndars from Yugoslavia, and Yugoslavia and India will import trucks and buses from the UAR. Implicit in this interpretation is the assembly in India ofb.) Finally, Yugoslavia will assist Indonesia inlant for the production of both cars


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16. Two weeks after the conclusion of the contract between the USSR and Fiat int was announced that Fiat also would help in the expansion of the Polish auto industry. Automobiles were assembled in Poland under Fiat license before World War II, but the changed political situation after the warecond Polish-Fiatand the USSR helped Poland to restartproduction. 6 contract, valuedillion, calls for Fiat to supply licenses, equipment, and technical adviserslant capable of producing00 and0 passenger cars. The equipment is to be installed at Zeran near Warsaw where all of Poland's current automobile production is being carried out. At first Fiate will be assembled from Italian and Yugoslav partsrilateral agreement {see, but Poland hopes eventually to use domesticallyparts. US firms have been asked to bid for some machine tools.

apparently will continuethe Varaaawa, currently its more powerful

orsepower) and more expensive car, butof the Syrena maller car which has been plagued by poor qualityeventually is to be curtailed. The Syrena and Waraaaua werein almost equal quantitiesareaawae (more than half the output of Uareaauaa) were scheduled for export. Poland apparently plans to produce00 Varaaawaa


the fallumania signedwith Renault valued atillionlant0ais now under construction at Pitesti,of automobiles is planned to beginwith operation at or near capacity byRumania has not manufacturedalthough Soviet-type jeepsnd it has theof passenger cars per capita of anycountry. The plant initially willfrom imported parts, but there are plansgradually to domestically Rumania will make partial paymentplant by supplying Rumanian-builtto France. Rumania has orderedfor the new plantS firm.


19. Bulgariaontract with Fiat in7 for the assemblylant in Lovech of passenger cars to be sold under the Bulgarian name of Pirin. Assembly of'a anda is to begin by the end The Lovech plant began to assemble the Soviet (known as the Rila) Bulgaria hopes to produce components for the Rila, but for the first few years at least, the parts will be supplied from the USSR as specified5 agreement. 0 Rilao0 Pirina are plannednd the annual capacity of the plant at Lovech will be raised gradually0 passenger cars. Also, Bulgaria

was negotiating with Willys subsidiaries in Brazil and Argentina to import "completely knocked-down" jeeps and the equipment for their assembly. Moreover, negotiations were under way7lant to assemble delivery vans and, perhapsater date, automobiles.

the fallulgariacontract estimatedillion withthe constructionlant in Plovdivassembling0 units of aB sedan (Butgar Renault). Only aof the component parts are to be ofinitially, but Bulgaria hopes toall of the parts are to be assembled by the end ofplant will be expanded0 tocarsnd toars per year

in the more distant future.


is the only Europeanwith no apparent plans to establishof passenger cars. In latecontracted with Fiat and Renault0 automobiles

Inillion contract was concluded with Volkswagen for the import of an unspecified quantity of passenger cars and spare partsive-year period. Under an agreement with the USSR, Hungary willuaranteed supply of Soviet passengerr more annually. Hungary, in turn, will specialise in the production of buses and heavy trucks and will deliver more than half ot its vehicle output to the USSR. Hungary also will continue to receive substantial numbers of East German, Czechoslovak, and Yugoslav automobiles.

East Germany

Germany, the largest manufacturerin Eastern Europe,ear in which it also hadregistration of automobiles (someand the most automobiles per

opulation). Despite its large supply of automobiles relative to that of its Communist allies. East Germany has the longest waiting period for the purchase of automobiles, probably because cars are relatively cheaper in relation to income in East Germany than in the other Communist countries. The most common cars on the roads in East Germany are the domesticallyelents and wart burg e. Aboutercent of the cars produced5 were trabants; tha remainder were tfartburgs. Thehichhorsepower engine, was first producedrimarily for export.

ast Germanydomestic production and imports. is planned to increase to at leastannuallyoal well withinpotential, andoare to be imported from CzechoslovakiaUSSR in the. The onlytooling contract with the Westyears was for Renault assemblyunknown capacity, that was installed atplant in Eisenach


second to EastEastern European countries inand inventory,6 andotal registration of Czechoslovakia plans to producecars annually and0 and to produce upcars andillion to 2on the road The governmentnew concern for Czechoslovak consumersalmost two-thirds of itsSkoda automobiles to domestic consumptioncompared with one-third The USSR is toassenger carss part

of an extensive bilateral trade agreement. Czechoslovakia imports cars from the Communist countries to help satisfy local demand but exports thousands of cars to the West in order to earn

foreign exchange. The Skoda plant in Mlada Boleslav, the country's most important automobile plant, is planning to build an automobile assembly factoryepair facility in West Germany. This plant purchased most of its existingfrom Western European firms

moat common car in0 mbhorsepower engine,at Mlada Boleslav Skodahave been produced since the early part

of the century. The Mlada Boleslav plantapacityehicles per day, but wasan average of onlyaily7 because of technical difficulties and shortages of supplies. There have been pronounced shortages of steel, tires, glass, paints, and adheslves ln Czechoslovakia, but officials hope to break this bottleneck by increased imports of thesefrom the West. Theuxurious sedan, is also produced in Czechoslovakia in small numbers.

Prospects in Eastern Europe

planned expansion of automobilein the Eastern European countriescompared with past performance, butstill leave these countries far behindWest in automotive affluence. ByGermany expects to have one passenger careveryesidents, and evel of one carttained by France and Great Britains and by tho United Statesontinued rapid growth in the stock

of automobiles in Eastern Europeo automotive challenge to the West is in prospect.

new programs for automotivein the Eastern European countries shouldwith their basic economic goals. holding contracts with Western firmsin automotive production havethat will stretch out theirpayments over several years. Theof automobile production in EastCzechoslovakia will involveeryof total industrial investment. Moreover,


the funds needed for expansion of the street and highway system and the automotive service sectors are necessary for and will be repaid in part by the expansion of tourism. In the long run,the widespread acquisition of passenger cars will lead to increasing demands for more investment in the automotive sectors and may require some diversion of resources from other industries.

28. The assembly of automobiles by theCommunist countries offers both an economicalolitically appealing means of filling the strong demand for private cars. There are savings in foreign exchange from domestic production as opposed to imports of Western models, and the cost of an imported unit probably is higher than one assembled locally. Much of the initial economic advantage of automobile assembly in at least the smaller countries, however, may be lost if they persist in plans to convert from imported to domestically produced parts. East Germany has estimated that economically efficient production of automobiles requires an annual output of atnits of the most important and largest components. apacitynits annually is about the minimum output required for economically efficient operation in the United States.) None of the smaller countries anticipates on annual productionper year in the near future. Even current production in the European Communist countries that use imported parts is not highly efficient, although high pricesarge profit to be realized. Most of the European Communist countries canother exportable items with greater relative efficiency than they can produce complete Czechoslovakia, for example, has admitted that automobilesbelow-average export effectiveness"probably with respect to sales to the Free Worldcompared with other products of its machinery industry. Some of the high costs may be reduced, however, if more agreements on automotive specialization are concluded, such as the agreement among Yugoslavia, Poland, and Fiat.

The Supporting Sectors Highways

29. Only about one-fourth of the Soviet highway network ofiles was surfaced and

less than one-tenth was paved5 . The network of surfaced roads in the USSR has been increasingery slow rate in recent years, and the new five-year plan does notharp increase, although some important intercity routes will be completed or improved. The highway network in the Eastern European Communist countries consists ofiles of roads, excluding urban streets. Aboutercent is paved with concrete, asphalt, or cobblestone) anotherercent is surfaced with crushed stone or gravel; and the, in the individual European Communist countriee and the Unitsd Statse, seeost of the network in Eastern Europe consists of only two lanes, andew routes are designed for limited access. The condition of the roads varies from country to country, with those in East Germany and in the former German territory of western Poland generally ln better condition than those in eastern Poland, Czechoslovakia, and the Balkan countries. With the exception of Yugoslavia very little new highway construction has taken place in Eastern Europe in recent years, probably reflecting, as in the USSR, the relatively small number of motor vehicles in these countries. All of the countries, however, have announced plans for rather ambitious improvement projects, and travelers report much current improvement work. Additional improvements and expansion probably will be necessary to accommodate the large increase in traffic anticipated by the.


30. As previously noted, inadequate numbers of service stations and garages and shortages of service personnel and repair parts areof all the European Communist countries. For example,3 tha USSR had onlyasoline stations, and5 Hungary hod onlytations and Bulgaria no moreThe United States has more The service problems in Poland are probablyof those in the other, less advancedcountries. 5 an average ofays was needed in Poland for repair and overhaul of



Table 7

Highway Network of the European Communist Countries and tbe United States if

Thousand Mile:

Type of Surface

Total Paved Stone or Gravel Earth




8 37

7 82




East Germany






United States

urban streets ror axl countries except for the USSR.

b. iles of limited access highway (autobahn).

automobiles becauseack of parts and facilities, and the motorist was sometimesto supply his own spare parts. arsaw newspaper, noting the problem of repairs, suggested that people return' to travel by horse. Czechoslovakia, Yugoslavia, and Poland recently have contracted with Western firms for assistance in the expansion of automotive services, and Rumania, Bulgaria, and Hungary are presently engaged in extensive construction of repair and service stations.


31. Plans for the expansion of crude oil refining capacity in the USSR and in Eastern Europe appear to be adequate, if implemented, to supply the gasoline requirements of theinventory estimatedlthough

Poland and Hungary may continue to require imports from the USSR or Rumania. Octane ratings probably will remain well below US standardsut new secondary refining installations will permit the manufacture of gasoline adequate for the lower compression ratios of automobiles used in theCommunist countries.


32, At present the European Communist countries-with the apparent exception of Czechoslovakia, East Germany, and Rumania, do not produce sufficient quantities of passenger car tires to meet their needs. In the USSR, shortages of tires wereduring the entire seven-year plans well as In apparent response to the anticipated rise in production for domestic use, efforts are under way in thecountries to increase both the output and quality of passenger car tires. These objectives, in turn, have spurred the purchase of tire plants from the West. In the case of Poland and Bulgaria, the addition of facilities supplied by the West probably will permit output to match requirements Purchases of tire production facilities by Czechoslovakiahould more than cover increased domestic needs and provide for enlarged exports of passenger car tires Inumania contractedestern European consortium for equipment to expand its two tire plants, which may enable the country to meet its needs for passenger car tires he USSR was near to an agreement with an Italian firm for the purchaseire plant that could substantially reduce the Soviet dependence on imports of tires. It seems unlikely, however, that Hungary will be able to meet its demands for passenger car tires0 without imports. The extent to which domestic tire output will meet future needs in Yugoslavia and East Germany is uncertain.


33. Production of ferrous metals in theCommunist countries by the5 is expected to be adequate to meet the requirements

of the planned expansion in production of Plans of the Soviet automotive sector to increase production will not significantly increase its claim on total output of ferrous metals. Much of the increased auto production in Eastern European countries0 will come from the assembly of imported parts and will not be hampered by the current lack of wide, continuous, hot and cold strip mills needed for auto body stock. By thes, Czechoslovakia, Bulgaria, and Rumania plan to have wide, continuous, hot and cold strip mills in operation and probably will be able to produce the flat rolled steel necessary for the production of small automobiles. Needs for ferrous metal which cannot be satisfied internally or by imports from other Communist countries probably can be satisfied through imports from the West. Most of East Germany's metallurgical needs for its present automobile production are satisfied by imports from the USSR. Czechoslovakia probably meets its needs through imports from Poland and the USSR.

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