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Czech Republic Autos Report Q1 2010
Market |
Automotive and Parts |
Report Type |
Market Research |
Country |
Czech Republic |
Published |
25 November 2009 |
Number of Pages |
56 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
New vehicle sales in the Czech Republic remained under pressure through Q309, according to figures from the Czech Car Importers Association (CIA). Sales of new vehicles, which fell 12% y-o-y in the first six months of the year, kept falling through the July-September period. Sales from the beginning of the year through 9M09 dropped to 133,577 units, down 14% from the year-ago period. Although the CIA has yet to release final figures, we estimate that sales in Q309 totalled around 38,520 units, or about a 27% yo- y drop from the same period in 2008.
In September 2009, Czech lawmakers approved a car scrappage subsidy plan similar to the incentive plans launched in several European countries. Under the plan, car owners who trade in a 10-year-old car and buy a new one valued at CZK500,000 (US$28,644) or more will receive CZK30,000 (US$1,720).
The go ahead for the scheme came after lawmakers overruled a presidential veto on the scrappage plan.
Critics worry the plan will be too great a drain on public resources. Many believe the government should do more to support aggregate demand and employment.
With passenger car sales contributing nearly 85% of total new vehicles sold in the country, the incentive should provide support for car sales in the near term. A reduction in car VAT that took effect from April 1 2009 should also offer support. However, Q4 tends to be a tough period for auto sales in the Czech Republic. While the scrappage plan should offer a boost, we doubt it will be enough to reverse the declines in the first nine months of 2009 and forecast auto sales to post a 4.2% fall to 206,296 units in 2009.
The credit crisis has forced many carmakers to scale back production, although exporters have enjoyed a leap due to scrappage schemes introduced in countries such as Germany and France. Toyotya Peugot Citroën Automobile (TPCA) manufactured 174,949 cars in H109, up 0.6% from the year-ago period.
However, as scrappage programmes have winded down across Europe, production is likely to come back.
TPCA, the third biggest auto exporter in the country, froze hiring in 2009 amid expectations that market conditions in Europe will remain difficult.
We believe producers will remain cautious about expanding capacity significantly. In 2010, production is expected to rise just 1.5%. However, by end-2014, the Czech Republic's automotive output should reach nearly 1.2mn units, up about 37% from 2009 levels, and the industry is expected to operate at or near full capacity by then.
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