Boston, MA -- (SBWIRE) -- 04/16/2014 -- Passenger car sales in Bulgaria declined 1.0% y-o-y in the first 11 months of 2013, to 27,256 units. In 2013, we expected private consumption to remain weak on the back of prolonged political uncertainty exacerbating existing dynamics in the labour market. Our bearish outlook for consumer sentiment has informed our forecast for a 2% drop over the year. In 2014, we forecast a decline in sales of 1.8% as consumer weakness continues to weigh on the passenger car segment.

Passenger car sales in Bulgaria have declined considerably from their 2008 levels, when sales hit some 43,000 units. Sales in this segment have remained relatively weak since then, and we do not see the market reaching these levels again over our forecast period to 2017.

On the plus side, Bulgaria has emerged as one of the preferred destinations for parts suppliers looking to increase their presence in the region, although the economic crisis has hit profits and prompted suppliers to reduce their operational capacities. Declining vehicle output in the key markets of Germany and Italy has put a crimp on demand for Bulgarian parts, but BMI believes that the long-term prospects are good, supported by the country's competitive advantages in cost, taxation and location.

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The Bulgarian government is seeking more investments in the country's auto industry following its success in winning a new vehicle plant for Chinese carmaker Great Wall Motors in 2012. The government has been attracting new investments from suppliers owing to low corporate and personal taxation, a skilled workforce and a stable economic climate. Great Wall's factory in Lovech, which has an annual manufacturing capacity of 50,000 units, produces Steed pick-up trucks from kits supplied from China.

Most recently, Elektrokabel Bulgaria, a supplier of the globally active Nexans Autoelectric Group, plans to establish a new assembly facility in Pleven, Bulgaria, according to Invest Bulgaria Agency in January. The supplier intends to spend EUR7mn (US$9.5mn) on the new plant. It will cover an area of 5,000m2 and is set to employ approximately 600 people in the areas of production, administration, logistics, quality assurance and process engineering.

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