Škoda Group plans rail vehicle production plant in Baku
Czech company Škoda Group plans to establish a rail vehicle production and maintenance facility in Baku.
The project could boost local industry, create jobs and facilitate technology transfer. However, investment figures, production capacity and a timeline have yet to be announced.
Czech transport equipment manufacturer Škoda Group has announced plans to establish a production facility and maintenance centre in Azerbaijan. The company aims to eventually use the facility to serve customers not only in Azerbaijan but also across the South Caucasus and Central Asia.
The plans emerged on 12 October during a meeting between Czech Transport Minister Ivan Bednárik and representatives of Azerbaijan Transport and Communication Holding (AZCON). The meeting was attended by AZCON head Shahin Babayev, Baku Metro chairman Vusal Aslanov and Azerbaijan Railways chairman Rovshan Rustamov.
Škoda Group vice-chairman Tomáš Ignačák said the company intended to establish a joint venture with a local partner in Azerbaijan and gradually expand production.
The proposal covers not only the supply of finished rolling stock but also maintenance services, training for local specialists, the involvement of Azerbaijani companies in component supply chains and the transfer of European manufacturing technologies.
However, the project remains at the proposal stage, with no investment agreement signed so far.
What is Škoda Group planning in Azerbaijan?
Škoda Group is one of Europe’s rail transport manufacturers. The company produces metro trains, trams, suburban electric trains, trolleybuses, as well as vehicle control and drive systems.
Škoda Group should not be confused with carmaker Škoda Auto. The latter is owned by Volkswagen Group, while Škoda Group, which specialises in rail transport, is part of Czech investment group PPF.
According to the company, it has production facilities in the Czech Republic, Finland and Turkey. In 2025, the group’s revenue, including figures from Turkish manufacturer TEMSA, reached €1.45bn.
Škoda Group’s proposal to Azerbaijan focuses primarily on modernising the metro and suburban rail networks. The planned joint venture would gradually develop local production and maintenance capabilities, using local resources and facilities.
One potential benefit would be reduced dependence on foreign manufacturers for maintenance, spare parts and repairs throughout the service life of rail vehicles.
Training local engineers and technicians could also become an important part of long-term industrial cooperation. However, the extent of these benefits will depend on which production and maintenance operations are carried out at the new facility.
Baku Metro expansion creates new opportunities
Škoda Group’s interest in the Azerbaijani market coincides with the country’s plans to expand its public transport infrastructure. Under a state programme approved in January 2025, Baku plans to build 10 new metro stations, modernise existing lines and purchase 299 new carriages by 2030.
In addition to new stations, the programme includes expanding train depots, upgrading power supply systems and increasing the metro network’s capacity. According to AZCON, around $2.5bn is earmarked for the expansion.
In June 2026, Baku Metro and the Asian Infrastructure Investment Bank signed loan agreements worth a total of $180m to finance the first phase of the expansion. The funds will primarily support ongoing work at the Darnagul and Khojasan train depots, as well as upgrades to existing metro stations.
Azerbaijan has therefore already approved a metro modernisation programme and secured funding for several projects. The Czech company’s proposal aims to meet potential demand for equipment, maintenance services and industrial cooperation arising from these plans.
How much production will take place locally?
One of the key factors determining the project’s economic significance will be the scale of production established in Azerbaijan.
Rail vehicle manufacturing involves various levels of localisation. Some facilities specialise in assembling components imported from abroad and testing finished vehicles. Others also manufacture metal structures and electrical equipment, and carry out engineering and design work. Each model requires different levels of investment, technical infrastructure and skilled personnel.
Azerbaijan already has experience assembling metro carriages at local facilities. In 2024, Baku Metro began assembling new-generation carriages using existing infrastructure. According to official figures, under a contract to supply 65 carriages between 2024 and 2026, specialists from the manufacturer also took part in assembling, commissioning and testing rolling stock in Azerbaijan.
This experience demonstrates that existing infrastructure can be used for final assembly and technical testing. However, it remains unclear how Škoda Group’s proposed model would differ from current practices.
The company has yet to disclose which stages of production would take place in Azerbaijan, what proportion of components would be locally manufactured, the terms of technology transfer or the facility’s annual production capacity. These indicators will help assess how much added value the project could generate for local industry.
Even if the facility initially focuses only on assembly and maintenance, the project could help train skilled workers and expand rolling stock repair capabilities. However, manufacturing more complex components in Azerbaijan would require additional investment and a steady flow of orders.
Škoda Group is not the only contender
Azerbaijan’s talks on purchasing new metro carriages and introducing modern technologies are not limited to the Czech company. In January 2026, Baku Metro officials met representatives of Swiss company Stadler Rail Group. They discussed the possible purchase of up to 300 new carriages, reducing operating costs and introducing modern signalling systems.
In February, a Škoda Group delegation led by CEO Petr Novotný also held talks with Baku Metro officials. Discussions focused on purchasing new carriages and prospects for long-term technological cooperation. Potential cooperation between AZCON and Škoda Group had also been discussed in May 2025.
These meetings indicate that Azerbaijan is exploring opportunities to involve international suppliers in modernising Baku Metro. However, Škoda Group’s proposal to establish a facility in Baku does not mean the company has secured orders for the carriages envisaged under the state programme.
Key criteria for selecting suppliers will include compliance with technical requirements, purchase price, energy consumption, maintenance costs and long-term operating conditions.
Localising production in Azerbaijan could bring additional economic benefits. However, its impact on procurement costs and competition will depend on the specific commercial proposals.
What does Uzbekistan’s experience show?
Škoda Group already has experience of a similar cooperation model in Central Asia. In April 2026, the company signed a strategic cooperation agreement covering the supply of 10 electric trains to Uzbekistan and their maintenance.
The project, worth more than €120m, also includes establishing a joint venture, localising maintenance services and training specialists. The company also plans to launch a Škoda Academy educational programme in Uzbekistan.
This example shows that Škoda Group’s cooperation model goes beyond supplying rolling stock to include developing local maintenance infrastructure and transferring technology. However, its projects in Uzbekistan and Azerbaijan are at different stages.
In Uzbekistan, the number of trains and project cost have already been agreed, and a strategic cooperation agreement has been signed. In Azerbaijan, the company has so far only announced plans to establish a production and maintenance facility.
The proposed Baku facility’s potential to serve regional markets will also depend on commercial prospects. This would require orders from neighbouring countries, compliance with technical standards and competitive production costs.
