Fast Market Research recommends "Czech Republic Autos Report Q4 2012" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 11/12/2012 -- Passenger car sales in the Czech Republic increased 5% y-o-y, to 105,391 units, in the first seven months of 2012, according to the Czech Automotive Industry Association. BMI, however, maintains its forecast for 3% growth in the sector in 2012, as a number of factors affecting consumer sentiment and purchasing power lead us to believe that passenger car sales will not be able to maintain the strong rate of growth observed in the first seven months of the year.
BMI believes that a number of macroeconomic factors will cause consumer sentiment to dwindle in the latter part of the year, abating the rise is passenger car sales. Unemployment remains relatively high in the country, at 8.3% as of July 2012. At the same time, the government's fiscal austerity measures, set to ease next year, continue to weigh on household spending habits. We maintain our forecast for net exports to be the only positive contribution to real GDP growth this year, at 0.9 percentage points (pp), down from the 3.2pp contribution in 2011.
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Passenger car production in the Czech Republic rose 4.8% year-on-year (y-o-y) in the first six months of the year, to some 662,500 units. BMI forecasts 5.4% growth in this segment for 2012, which we maintain. Our 2012 forecast marks a notable slowdown in growth from an 11.4% increase in 2011, and a 10.5% increase in 2010. We have previously cautioned that vehicle and equipment production capacity in Czech Republic could slow down and potentially decrease in the face of an increasingly uncompetitive business environment and ongoing economic malaise in Europe.
Skoda still dominates the domestic market with a 30% share. Success comes at a price, however. In March 2012, Skoda Auto reached an agreement with local labour unions for a 5% increase in wages on average in a deal which will be valid until March 2013. The agreement comes after unions demanded a bigger share of the company's growth story and pressed for the gap in wages between its German and Czech workers to be narrowed.
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