The automotive industry in Latvia
Like its Baltic neighbors, Latvia does not have a traditional, large-scale automotive production sector, but in recent years it has developed into a dynamically growing location for automotive supply, vehicle conversions, electromobility, software development, and logistics . The industry is strongly export-oriented and benefits from competitive costs, high levels of digitalization, and a flexible business environment.
Structure and importance of the industry
The automotive industry in Latvia is spread across several pillars:
1. Supplier industry and component manufacturing
Latvia is not an OEM location, but is becoming increasingly relevant in the supplier sector:
Manufacturing of cable harnesses , metal parts, plastic components and electronic modules
Production for OEMs and Tier 1 partners in Germany, Scandinavia and Central Europe
A growing network of small and medium-sized enterprises specializing in niche products
Labor costs are below the EU average, which positions Latvia as an attractive manufacturing location.
2. Vehicle conversions and special vehicles
Latvia has established a strong position in several segments:
Conversions for commercial vehicles, fire departments, military and rescue services
Production of small series for export to Northern Europe
Companies specializing in armor plating, modular superstructures and off-road vehicles
The sector is growing and gaining further importance due to increasing demand for specialized solutions in the EU.
3. Electromobility and battery ecosystem
Despite low vehicle production, Latvia is more active in the field of e-mobility than is often perceived:
Expansion of the nationwide fast charging infrastructure
Companies in the field of battery refurbishment, e-bike and e-scooter production
Start-ups in the fields of e-powertrain software, energy management and charging infrastructure
The state promotes e-mobility through subsidies for private and commercial buyers.
4. Software, digitalization and automotive IT
A key competitive advantage of Latvia is its strong IT sector. Many companies work for the European automotive industry.
Development of telematics systems, fleet management software, and connected car solutions.
Cybersecurity service provider for OEMs and fleet operators
Specialized companies in the field of embedded software for control units
The IT cluster in Riga, in particular, is generating growth momentum.
5. Logistics and vehicle trading
Thanks to its location and its ports, Latvia plays an important role in the European flow of vehicles:
Major transshipment points for new and used cars via the ports of Riga and Ventspils
Distribution to the Baltic States, Scandinavia and Eastern Europe
Growing importance for the transport of electric vehicles via maritime routes
The logistics industry is one of the largest employers in the automotive sector.
Latvia’s challenges
Despite dynamic development, Latvia is struggling with the following structural problems:
No OEM in the country → limited direct industrial value creation
Dependence on the European economic cycle and on export markets
Competitive pressure from Poland, Slovakia and the Baltic states
Skilled worker shortage, especially in the engineering sector
Opportunities and future prospects
The medium- to long-term growth drivers are clearly defined:
1. Expansion of the automotive supplier sector
Latvia is increasingly positioning itself as a cost-effective, flexible location for:
Electronics manufacturing
Plastic and metal components
Cable systems
2. Cluster for Automotive IT
Riga and Liepāja are becoming hotspots for:
Vehicle software
Mobility apps
Fleet and telematics solutions
E-mobility IT
3. Electromobility and Recycling
New opportunities arise through:
Battery second-life projects
Expansion of the charging infrastructure
Production of electric micromobility
4. Specialization in small series and conversions
Latvia scores highly in European comparison due to its flexibility, especially in the area of:
municipal vehicles
Rescue and military technology
Off-road and special vehicles
Our conclusion:
Latvia does not have large-scale vehicle production, but has successfully established itself as a specialist supplier, IT hub, and logistics location within the European automotive industry. Its future prospects clearly lie in software, electromobility, special-purpose vehicles, and international supply chains . With a growing digital economy, increasing expertise in e-mobility, and a favorable strategic location, the country remains an increasingly important component of the European automotive value chain.
