Print Edition - 2017-09-14 | MONEY
Carmakers see promise in eastern Europe
Sep 14, 2017-As Frankfurt’s IAA auto show gets under way, European carmakers are looking to the continent’s east for growth, where increasing numbers of people are wealthy enough to afford their own wheels.
Car sales there increased 14 percent year-on-year in the first three months of 2017 alone, to almost 700,000 vehicles, market research firm Jato found.
Poland saw sales grow by 15.5 percent to 277,000 vehicles in the same period, making it Europe’s seventh-largest car market. Over the whole year 2017, sales are expected to reach a new record of 1.3 million in a region stretching from northerly Estonia to Bulgaria on the Black Sea—up 10 percent year-on-year.
That’s a slight slowdown from the 16 percent recorded in 2016, industry expert Ferdinand Dudenhoeffer of the Duisburg CAR institute noted, but a great deal more dynamic than the 3.0 percent expected in western Europe.
“Economic growth in the region and the relative lack of market saturation in motor vehicles are the factors underpinning” growth in the east, he said. Especially in Romania and Bulgaria, which have been members of the European Union for just 10 years, “there remains lots for room” to catch up, Petizon agreed.
Sales have grown hand-in-hand with carmakers’ increasing investments in factories in the region, as massive multinationals chase lower labour costs than in western Europe. Skoda, native to the Czech Republic, is far from the only manufacturer at home in the east, but remains the market’s biggest player, with a 17-percent share of sales.
It is a subsidiary of German giant Volkswagen, whose own-brand cars and Japan’s Toyota hold second and third place respectively. But competition comes from Renault-Nissan’s Dacia brand, whose manufacturing presence in the region is a factor in some buyers’ choice. Peugeot parent company PSA has secured its own eastern foothold with the recent takeover of Germany’s Opel, including factories in Hungary and Poland.
And Jaguar Land Rover plans to open a one-billion-euro ($1.2 billion) factory in Slovakia in 2018.
Kia and Hyundai joined forces to set up shop in the Czech Republic and Slovakia, garnering a double-digit market share in each country.
Published: 14-09-2017 07:26