Abstract
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, BMI
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.
| 
View Cart
