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Italy Autos Report Q1 2012
Business Monitor International, Dec 2011, Pages: 45
Business Monitor International's Italy Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Italy's automotive industry.
Pessimism in consumer and business sentiment in Italy has prompted BMI to expect modest 3.5% yearon- year (y-o-y) growth in vehicle sales in 2012, which will follow four consecutive years of contraction between 2008 and 2011. BMI expects the market to be hit by falling real wages, unemployment (which stood at 8% in Q211) and heightened economic uncertainty both domestically and abroad. Although the market will remain firmly in positive territory during the remainder of the forecast period, BMI does not envisage a complete recovery in market demand at any time during the forecast period. By the end of 2016, total sales should reach only 2.34mn units (according to BMI’s forecast) – nowhere near the 2.79mn units sold in 2007.
There is also pessimism in the production segment, which struggles due to its reliance on Fiat. The carmaker is affected by consistent delays in reaching labour agreements at its home plants and contracting market share in regional markets. Total vehicle production accordingly fell 12.3% y-o-y to 389,994 units during the first three quarters of 2011. Under these conditions, BMI fears the industry will struggle to significantly increase production and forecast total vehicle production to reach 853,169 units in 2016, almost 50% lower than pre-crisis levels.
Uncertainties in domestic vehicle sales and the shaky future of autos production in Italy mean that the country is ninth in BMI’s Risk-Reward Ratings for the autos industry in Europe. Italy now ranks way behind Western European peers the UK, Germany and France, and scores more poorly than the leading emerging European markets of Russia, the Czech Republic, Poland and Turkey. While stronger economic growth will partly help improve its score, BMI sees little scope for Italy to move up the ratings unless it improves its production competitiveness, eliminates widespread corruption and reforms its inefficient labour market.
The Italian economy has similarly long underperformed its eurozone peers and is continuing to put in a poor performance during the recovery. The economy is in need of growth more than ever as concerns over the sustainability of the national debt come to the fore. A failure to restore competitiveness through market reforms and to deliver a credible plan to pay down the national debt will consign Italy to a permanent low-growth trajectory, and risk a sovereign debt crisis.
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