Over the past 30 years, the Czech Republic has become the country with the highest production of cars per capita in the world. The year 2024 was record: more than 1.4 million vehicles were manufactured in the 10 million country, an increase of almost 4 percent compared to the erstwhile year.
However, production decreased by 7.1 percent in the first 4th of 2025, mainly due to lower request in Western Europe. This in turn is linked to problems in the European automotive industry, slow transition to electromobility and US customs tariffs.
While car production is shrinking, the arms manufacture is booming. Over the last 3 years, Czech arms factories have importantly increased their production and importantly increased profits.
According to Ales Rod of the Centre for economical and marketplace Analysis, the share of the Czech arms manufacture in the economy may increase respective times over the next fewer years from the current level of around 1 percent of gross home product (GDP). “We see the possible for this”, he told Czech Radio: “We see request in the arms manufacture for a decade or even 15 years ahead. We see empty warehouses. What we produce will barely cool down and disappear.”
Defence manufacture a fresh driving force for the economy?
Danuse Nerudova, erstwhile Rector of Mendel University in Brno and associate of the European Parliament's Committee on Budgets, is of the same opinion.
– The defence manufacture can become a fresh engine for the Czech and European economies. It can exploit the supply opportunities and the workforce freed by the automotive sector, stimulate economical growth and at the same time strengthen our security," she said in a conversation with DW.
Another celebrated Czech economist, Petr Zahradnik, is somewhat more skeptical. “Czech weapons factories last golden times, that’s true. Their production capacity is being increased, and Czech arms companies are transferring their capital to the most developed parts of the world," said DW advisor to the European economical and Social Committee in Brussels. But: – I do not believe that they will replace the automotive sector as the driving force of the Czech economy – says Petr Zahradnik. He adds: "I do not want weapon production to replace civilian production either.
Czech Republic – conventional armory
The territory of today's Czech Republic was the centre of arms production before planet War I. During the interwar and later period Czechoslovakia was besides 1 of the world's leading arms manufacturers and exporters. For a long time, arms exports accounted for about 1 tenth of all Czechoslovakian exports.
From 1958 to 1989 Czechoslovakia produced 10 1000 combat and training jets. According to experts, Czechoslovakian weapons were then best in the east bloc and were exported to tens of countries around the world.
But there was besides interior request due to the fact that in the late 1980s. Czechoslovakia had a heavy armed army of respective 100 1000 soldiers and spent as much as 20 percent of the state budget on defense.
The end of the Warsaw Pact and the confrontation in Europe, as well as the general disarmament in the early 1990s, accompanied by a crucial simplification in the military budget, hit Czech defence companies strongly. Czechoslovakia's last major arms order was an export contract for 250 T72 tanks to Syria, which was approved by the first non-communist government in 1991.
The collapse of Czechoslovakia in 1992 besides led to the division of the defence industry: the production of tanks and dense machinery remained mainly in Slovakia, while the aviation industry, the production of tiny arms, ammunition, radar systems and primarily tiny arms remained in the Czech Republic.
Not always successful privatization, reducing defence spending to 1 percent of GDP, professionalization and reducing the army to just about 20,000 soldiers. All this has greatly weakened the Czech defence industry.
War in Ukraine as a origin of growth
After Russia's full-scale invasion of Ukraine in February 2022, Czech weapons factories increased their production, frequently by hundreds of percent a year. In particular, the production of ammunition, the modernization of tanks, the production of military vehicles, self-propelled haubics, drones, radar equipment and world-famous device guns and bullets has been booming always since.
Aero aircraft factory, pride of the Czech defence industry, has developed a fresh Skyfox combat and training aircraft to be utilized for training Ukrainian F-16 fighter pilots.
Forty percent of production from Czech weapons factories goes to Ukraine, where joint ventures are besides created. full exports are up to 90 percent of production. At the same time, however, purchases made by the Czech army are increasing. Last year Czech defence spending first reached 2 percent of GDP. Prime Minister Petr Fiala announced that in a fewer years they should scope 3 percent.
The profits of private owners of arms companies are besides growing; the owner of the Czechoslovak Group, Michal Strnad, has increased its assets more than twice since last year – by 129.5 billion kroner (about 5 billion EUR) to 230.5 billion kroner (about 9 billion EUR). another major arms manufacturers experienced akin improvement last year.
Weapons factories increase employment
And boom is expected to last for the next fewer years. The STV Group ammunition maker triples its large caliber artillery production, which it mainly supplies to Ukraine, with 100,000 pieces this year. The PBS Group besides plans to double the production of rocket and drone engines.
The number of employees in companies besides increases significantly. The STV Group itself plans to hire 1,000 additional employees. According to the yearly study Czechoslovacka Group, the largest Czech arms company, which, in addition to the production of ammunition, includes the military car mill Tatra, already employs 14 1000 people.
For comparison, Skoda-Auto's largest automotive group employs about 20,000 people in its main plant in Mlada Boleslav. However, little demanding production of electrical cars in the future will lead to less workers. At the end of February 2025 the head of Skoda Auto, Klaus Zellmer, told the manufacture service “Automobilwoche” that his company, which presently employs 41,000 people, plans to reduce employment by 15 percent.
Many of these workers are likely to be absorbed by the defence industry. According to Czech recruitment agencies, they will not require any major retraining.
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