Czech Republic Autos Report Q2 2009 - New Company and Market Analysis

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2009-06-17 22:29:04 - Czech Republic Autos Report Q2 2009 - a new market research report on companiesandmarkets.com

www.companiesandmarkets.com/Summary-Market-Report/czech-republic ..

New vehicle sales in the Czech Republic increased by 4.7% in 2008, totalling 203,647 units for passenger cars and light utility vehicles. Despite ending with a positive growth rate, the pace is much slower than the 12.2% growth in 2007, and industry experts warn of slower growth in 2009.

Automotive sales in the Czech Republic had inched up to nearly 10.1%

 

 

year-on-year (y-o-y) growth in the first ten months of 2008, but declining demand in the remaining two months of 2008 brought the end of year sales to only 4.7% higher than 2007’s. In this latest Czech Republic Automotives Report, the report attributes the slowdown to the effect of the ongoing financial crisis, and the subsequent deceleration in the eurozone.

Domestic auto dealers responded to slow sales by coming up with reduced prices in the final months of the year, whereas locally based manufacturers resorted to production cuts with the view to avoiding overproduction. The Czech Ministry of Finance (MoF) has proposed to allow a reduction in VAT to boost vehicle demand in the market. The Czech Car Importers Association Secretary Pavel Tunkl identifies strong growth potential in the Czech market, and has stated that the change in the proposed VAT rate could help the industry attain a double digit growth – which may be difficult otherwise.

Czech firm, Škoda Auto (a subsidiary of Germany’s Volkswagen), led the market in new vehicle registrations in 2008, with 44,530 units. However, this represented a decline of 10.2% compared to the January-December period in 2007. This occurred as a result of the economic crisis that engulfed Eastern Europe. As the largest carmaker in the country, Škoda has been hit particularly (and, indeed, disproportionately) badly. Indeed, the majority of other producers witnessed increased production in 2008, with Ford seeing output grow by 22.5%. However, aggressive discounting in the face of falling demand has resulted in falling sales value. According to the AIA, Toyota, and PSA/Peugeot-Citroen collectively saw sales fall by 21% in 2008.

Reflecting the current difficulties in the market, according to AP, Hyundai announced in January 2009 that it had reduced its normal five-day work week by one day at its Czech Republic facility. The company reduced working hours in January 2009 in line with the declining demand for vehicles in Europe.