Based on firm-level research and development (R&D) data, we evaluate the extent of functional upgrading in the Czech automotive industry between 1998 and 2008. The analysis draws on a unique database of 476 Czech-based automotive firms with 20 and more employees in the broadly defined automotive industry, a survey of 274 automotive firms and twenty-five in-depth company interviews. In addition to assessing changes in the extent of automotive R&D, we analyze the most important locational factors of automotive R&D in Czechia and its regional distribution in the country. We examine changes in the spatial concentration of automotive R&D between 1998 and 2008.The analysis is conducted for foreign-owned and domestic companies separately to evaluate the differences between these two groups of firms. Based on this analysis, we consider changes in the relative position of the Czech automotive industry in European automotive production networks between 1998 and 2008.