Carmakers still see higher potential for sales growth in Eastern Europe

Article by Anita Panait, on August 9, 2012

Despite the economic issues affecting Europe, carmakers continue to see higher potential for sales growth in the east region than in the western markets. According to Hans Schep, Ford of Europe's regional sales director responsible for central and eastern European markets, Eastern Europe is bound to make a lot of development over next few years.

One of the factors for Eastern Europe’s high-growth potential is the low car ownership in many countries in the region. Another factor is the huge pool of potential buyers who might swap their used vehicles for new ones when the region’s economic growth recovers. Also a factor is the probability that customers will select more profitable higher value models as their countries become wealthier.

Eastern Europe was hardly hit by the credit crisis in 2007-2008, with most countries in the region posting significant drops in new-car sales as governments and banks squeezed credit, resulting in buyers being unable to finance car purchases. According to market researchers JATO Dynamics, new-car sales dropped 41 percent to just over 750,000 in 2011 from 1.3 million in 2008 in the 10 major central and eastern European (CEE) countries.

Schep, however, revealed to Automotive News Europe that some markets in the region have rebounded while other countries will have to work harder in several years to post a recovery. Schep said Hungary will have a relatively slow recovery as new-car sales in the country dived to 61,000 in 2011 from almost 200,000 in 2007.

Other countries like Romania are likely to make a slow but steady rebound. Car sales in the country dropped to 168,400 in 2011 from 367,000 in 2007. Jerome Olive, head of Renault's Romania-based Dacia brand, expects the Romanian market to invigorate, saying that their prediction is based from “sound economic elements.” Olive remarked that the growth rate in Romania is “pretty acceptable” and it would take some years before the country returns to the market level it had in 2006-2007.

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