Bulgaria Autos Report Q2 2008

Bulgaria's automotive sector performed better than BMI expected, with the post-accession influx of used cars only exerting moderate downward pressure on automotive sales, according to our latest Bulgaria Automotive Report.

Strong economic growth, rising incomes and the growth of credit options for car loans have combined to make the Bulgarian car market one of the fastest growing in Europe. However, it remains one of the smallest markets. In terms of sales volume, Bulgaria still lags behind other EU states with similar population size. In Austria, Sweden and Portugal, car sales amounted to 339,699, 358,722 and 276,643 units respectively, putting Bulgaria's automotive market at a fifth of the level achieved in the EU's more developed economies in terms of per capita sales.

In 2007, Bulgarian automotive sales totalled 51,728 units (up 21.9%), including 41,029 passenger cars (up 26.2%) and 10,699 commercial vehicles (up 7.0%). In terms of market share, Toyota was the most popular brand, with its sales rising 38.2% to 5,813 units with a market share of 11.18%. Peugeot's 5.3% drop in sales meant it fell from first to third place in 2007, with 4,384 units sold. Ford moved from third to second place, with sales up 8.56% to 4,450 units. In the top 10 most popular brands, Dacia, Chevrolet and Volkswagen recorded growth of 75.1%, 55.6% and 53.9% respectively. Compact city cars and midsize models generated 44.2% of overall automotive sales in 2007. Small and mid-size vans generated a further 21% of sales while four-wheel-drives contributed 16.6%. The Dacia Logan sedan, manufactured in neighbouring Romania, was Bulgaria's most popular car model in 2007 with 2,529 units sold.

In 2007, Mercedes retained its lead in the commercial vehicles segment, with sales rising 34.1% to 1,218 units, giving it a market share of 36.6%. Iveco also maintained its second place position with a 23.2% market share, despite an 11.6% drop in sales. Volvo's performance was impressive, with sales up 149.2% to 633 units, giving it a market share of 19.0%. This was secured by the opening of a new Volvo truck centre in Sofia in April 2007, including a spare parts warehouse. The first Volvo-owned workshop opened in the country in 2000.

Bulgaria scored 39.1 (out of a theoretical maximum of 100) in BMI's new automotive business environment rating, putting it joint last with Croatia in our regional rankings. This market's stronger areas include a highly competitive environment and low market risk. Areas of particular weakness are the regulatory environment and the lack of assembly facilities. Bulgaria has the lowest rate of car ownership in the EU. The situation is changing with rising income levels leading to rapid car sales growth and a highly competitive market in which no brand is dominant. BMI expects Bulgaria to climb up the rankings in the years ahead, a trend that could be given a major boost if an automotive producer decides to set up assembly operations in the country.