Serbia’s manufacturing growth has become increasingly dependent on vehicle production in Kragujevac, masking contractions across much of the country’s industrial base.
Manufacturing output rose 1.3% year on year in the first seven months of 2026, but motor vehicle and trailer production contributed 1.8 percentage points to that increase, according to the September edition of the Macroeconomic Analyses and Trends bulletin.
Without the automotive contribution, Serbian manufacturing would have contracted.
Vehicle production increased 44.3% in January-July and 29.6% in July alone, supported by production of the Fiat Grande Panda at the Stellantis factory in Kragujevac. The plant added a petrol-powered version to its electric model line-up earlier this year.
The sector generated exports of €3.25 billion, making it Serbia’s largest manufacturing export industry. Vehicle exports increased by almost €1.09 billion, accounting for 68.5% of the total increase in manufacturing exports.
That performance contrasts with weakness elsewhere. Basic-metals output fell 12.5% in January-July, computer and electronic equipment production declined 18.2%, while clothing and leather production dropped by 11.5% and 6.5%, respectively.
Only 10 of Serbia’s 24 manufacturing divisions expanded during the first seven months, and they represented just 39% of the sector.
Serbia is consequently producing more capital goods, but the improvement is concentrated around a narrow group of factories. Capital-goods output rose 8.8% in July, while durable and non-durable consumer-goods production declined.
The Kragujevac expansion has given Serbia a powerful new export engine, but also increased its exposure to vehicle demand in Italy and Germany, production decisions taken outside the country and the commercial performance of a small number of models.
The automotive boost is carrying Serbian industry for now. The harder test will be whether domestic suppliers and other manufacturers can turn one factory’s expansion into a broader industrial cycle.
