Slovakia Autos Report Q4 2010
Business Monitor International, September 2010, Pages: 49
The Slovakia Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Slovakia's automotive industry.
The Slovakian economy is beginning to make meaningful economic gains. The global downturn significantly depressed its core export trades, but forecasts are now being upgraded. The central bank recently increased its growth figures for this year from 3.2% to 3.7%, demonstrating increasing confidence in not only domestic markets but also foreign appetite. This is significantly above BMI's forecast of 1.5%, and also is a great improvement on 2009's 4.9% fall. The country is poised to outperform the eurozone region, which is set to expand 0.8% in 2010, according to forecasts from the European Central Bank.
In terms of auto production, several of the big players have begun to ramp up their output from 2009's lows. In July, Volkswagen (VW) announced it will hire 1,000 staff in Slovakia to help meet new orders for its luxury SUV's. Kia Motors also has said it intends to raise production at its Slovakian facility to 210,000 cars in 2010, of which 35,000 will be the new Kia Sportage. This prompts the belief that both of these companies are increasingly using Slovakia as a regional hub for production. BMI, however, sees little optimism for the new car segment as robust recovery in household spending remains off the cards this year, prompting BMI to significantly downgrade our passenger car sales forecast to a near 13.6% y-oy fall, to only 65,000 units by the end of this year. No new car-scrapping bonus scheme has been announced and changes in VAT rules, for example allowing businesses to deduct VAT on any passenger car they buy as of the start of 2010, are not regarded as enough to boost car sales significantly. But sales should gradually pick up over the forecast period, and we expect total sales to reach 95,793 units by the end of 2014.
Hopes that domestic demand would pick up exports are dashed by the fact unemployment is only expected to start falling in Slovakia after 2011, as claimed in a recent World Bank report. This is the result of companies delaying taking on new employees until a firm economic recovery, with banks losing their caution about lending.
Joblessness is also rising as the government tightens spending. The new centre-right government in Slovakia is primed to deliver substantial fiscal consolidation over the coming years, having made this a key campaign pledge. The discretionary spending splurge pursued by the previous centre-left administration in H110 will likely preclude the new government meeting its 7.0% fiscal deficit target this year and we hold to our forecast for a 7.5% gap in 2010.
Such uncertainty is encouraging Slovaks to turn to used cars, with negative consequences. These vehicles have higher running costs, but also damage domestic demand for new vehicles, as well as the environment. This is compounded by the fact that around 25% of Slovakia’s car fleet is between five and nine years old, while 39% is comprised of vehicles aged between 10 and 19 years.
Executive Summary
Slovakia Auto Industry SWOT
Slovakia Political SWOT
Slovakia Economic SWOT
Slovakia Business Environment SWOT
Regional Overview BMI Stands By Domestic Demand Side View For Emerging Europe
Standing By The Domestic Demand Side Story
Business Environment Ratings
Table: Western Central And Eastern Europe Business Environment Ratings
Industry Forecast Scenario
Production And Sales
Table: Slovakia Auto Production And Sales
Trade
Table: Slovakia Trade
Macroeconomic Forecast Scenario
Table: Slovakia – Economic Activity
Competitive Landscape
Euro Entry
Manufacturers – Passenger Cars
New Investment
Suppliers
Company Monitor
PSA Peugeot Citroën Regional Profile
Financial Woes
Focus On Faurecia
Merger Opportunity
Eye On Eastern Europe
Company Profiles
Volkswagen (VW)
PSA Peugeot Citroën
Kia Motors
Country Snapshot: Slovakia Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Wages, 2000-2012
BMI Methodology
How We Generate Our Industry Forecasts
Sources
- Volkswagen (VW)
- PSA Peugeot Citroën
- Kia Motors
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