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Czech Republic Autos Report Q1 2012
Business Monitor International, Dec 2011, Pages: 47
Business Monitor International's the Czech Republic Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the Czech Republic's automotive industry.
BMI still believes positive growth in Czech new vehicle sales is achievable in 2011 based on buying patterns in previous years, when sales in the latter months of the year have rebounded from a slower summer period. This has played out so far, when new car sales increased by 1.95% year-on-year (y-o-y) to 136,684 units during the first nine months of 2011.
BMI has, however, lowered its light commercial vehicle forecast to 2% growth, owing to the private usage nature of some of the vehicles included in the segment, which will also be hit by weaker private consumption. On the other hand, the heavier truck market is already outpacing previous expectations in 2011 and BMI has raised its sales forecast to 35% growth. BMI does not not expect this level of growth to be sustainable over the five-year forecast period, however, as the truck market is currently at a low base following a contraction of more than 50% in 2009.
Although a significant improvement in consumer demand is expected from 2012, BMI does not anticipate a complete recovery in sales to pre-crisis levels until 2013 and has indeed revised its 2012 forecast to a decline in passenger car sales. BMI believes a number of factors are slowing the recovery in vehicle demand. Unemployment continues to be high, with the latest figures from Eurostat showing it stood at 7.2% in March. Although this is an improvement on the 9.6% rate recorded in December, BMI's Macroeconomic team expects the rate to average 8.4% in 2011, which will undoubtedly act as a drag on domestic demand for vehicles.
Car production in the Czech Republic grew a robust 11.4% year-on-year (y-o-y) to 895,728 units during the first three quarters of 2011, estimates from the country's Automotive Industry Association (AIA) have revealed. BMI believes that the better-than-expected growth came on the back of robust import demand from Germany, which is the destination for a large proportion of Czech-made vehicles. However, BMI believes that the momentum is unlikely to be sustained during the remainder of 2011 and in 2012, amid fears of a slowdown in German growth.
BMI has accordingly stepped up its 2011 production growth forecast to just over 9% y-o-y. In 2012, production is expected to grow at a modest 5.4%, which BMI believes will come on the back of the ongoing recovery in the emerging European markets, rather than in the Czech Republic's traditional export partner. A bright spot for the Czech production segment, however, lies in the fact that much of the production is of small cars - a segment which BMI believes will outperform broader passenger cars sales.
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