Czech Republic Autos Report Q1 2008

During the first 10 months of 2007 new car sales rose by 7.0% year-on-year (y-o-y) to 110,829 units, running ahead of our original full-year forecast of 118,664 units. In BMI's view, strong economic growth and household consumption have fuelled the upturn in new car sales and our outlook over the forecast period up to 2012 is increasingly optimistic.

According to data from the Czech automotive industry association, AIA, Skoda continued to lead the new car market during the first 10 months of the year. The carmaker did see its sales fall, however, by 6.0% yo- y to 40,506 units. Ford continued its run as one of the best performing brands during the year to October, with sales soaring by 64.1% against the prior-year period to 7,182 units. Other positive results among players ranked in the top 10 were reported by Kia, whose sales rose by a significant 65.0% y-o-y to 3,620 units and Opel, up by 39.8% y-o-y to 3,632 units. The other top 10 players reporting a downturn in sales for the period in addition to Skoda were Renault and Volkswagen (VW), which registered falls of 6.6% and 4.5%, respectively.

Sales of light commercial vehicles rose by 22.0% y-o-y to 47,893 units during the period January-October 2007 in line with our expectations that a significant amount of growth in the new vehicle market over the forecast period will take place in LCV sales. Skoda led the market once again, enjoying a 25.5% y-o-y increase to 11,606 units. VW's sales rose by 7.5% y-o-y to 5,170 units, while Ford saw its LCV sales rise by 6.1% to 4,822 units. BMI's revised forecast for new car sales in 2007 stands at 130,000 units. We expect sales to dip in 2008 in line with an ongoing tightening in the labour market that may squeeze nominal wages and consumer spending.

With respect to exports, data from the AIA show that during the period January-September 2007 exports of new cars and LCVs rose by a firm 11.0% y-o-y to 650,049 units. The increase comes on the back of a rise in production of these items, of 7.7% to 679,378 units. Market leader Skoda has faced increasing demand for its vehicles this year with 90% of the carmaker's output in the Czech Republic being sold outside the country. BMI has raised its 2007 forecast for exports to 800,000 units.