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Introduction to the Romanian Passenger Car Market
Globis GmbH, July 2008, Pages: 79
This Globis report provides a comprehensive introduction to the Romanian passenger car market. With a population of 21,6 million Romania is the third largest market in terms of population in Central and Eastern Europe (CEE) and the 7th largest among the European Union member states. Although Romania’s real GDP is growing at above 5%, Romania is one of the less wealthy nations within the E.U.. Romania’s GDP per capita currently is about 5.000 EUR.
Romania’s car penetration is still much lower than in Western European markets and also most other CEE markets like Poland or Bulgaria. In terms of car park however, Romania is among the top CEE markets. As in most other CEE markets, the car park is relatively old. 50% of cars are older than 10 years.
Since Romania became a member of the EU in 2007, the import of used cars has increased significantly. These imports mainly consist of cars which comply with the Euro 3 - emission standards. Romania is actively trying to prevent a further increase in older used car imports. However, a new registration tax scheme, with the aim of making older, less environmentally friendly cars much more expensive to import, was challenged by the European Court of Justice. Given this situation, the imports of older used cars into Romania will further increase.
The new car market is not affected through the increase in used car imports. It was also increasing strongly by 25% in the past and will grow at about 11% p.a. for the years towards 2010. A government initiative to pay people for scrapping their older cars and buying a new one is helping to boost the market.
Financing of cars is well established, with loan financing and leasing being equally preferred by private individuals and leasing being the preferred method by corporate buyers. Financing used car purchases is also widespread.
Romania has an active automotive industry since more than half a century. With Dacia, there exists a local passenger car brand. Dacia was taken over 100% by Renault in 1999. Since then, production capacity was increased and Dacia has been successfully positioned as a low-cost brand within parts of Europe. In 2007, Dacia manufactured 223.000 cars. Renault is planning to increase production levels to over 400.000 by 2010. Until end of 2007, the Korean Car Manufacturer Daewoo Motors has manufacturing a variety of its models in Romania. In March 2008 Ford bought the former Daewoo plant and plans to use Romania as a production base for a low-cost car still to be designed by 2010. In addition, Daimler is planning to establish a manufacturing venture in Romania, also in the mini- and small car segment. Given these developments, the Romanian car industry will witness a major boost over the next year.
The current situation provides excellent opportunities for suppliers of all tiers. Ford is partly looking for a new supplier network and Daimler will also be looking for low-cost but good quality suppliers to support their strategy. Currently, the Romanian automotive industry consists of a limited number of players – far less than in Poland, for example.
The aftermarket is growing by over 10,7% over the next years to 2010, slightly above the car park. The aftermarket is one of the most attractive sectors of the Romanian automotive industry over the next years. With further additions to the park and with more demanding consumers, better and more frequent service and better parts are needed.
The Romanian distribution system for spare parts is currently expanding. Larger international players like ATR, AD and Temot are already present in the market. In addition there is still a large number of smaller players. Currently, consolidation is no issue – the market is large enough for all players to grow. Eventually, consolidation will start.
For foreign aftermarket parts manufacturers the market is highly attractive. The main challenge, however, is the countrywide access to service stations (the main sales channel for parts to car owners), to spare part shops and eventually to the end customers.
To prepare this market report, Globis used primary and secondary research methods: expert interviews and consumer surveys – in particular for the market of automotive parts, which is not covered yet by any substantial statistical data – and standard analysis of secondary information available on the topic. Based on Globis' experience and developed competencies we have built proprietary market models to forecast future market development. The report was compiled in the period from February to July 2008 and includes data until June 2008, if available.
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