Greece Autos Report Q4 2009

The worsening economic outlook, evident from a 1.2% quarter-on-quarter (q-o-q) contraction in the economy in Q109, and the freefall in the autos industry itself, prompted the government to introduce vehicle scrappage scheme, similar to those introduced by other European governments. Although the primarily objective behind the scheme is to bolster vehicle sales, as BMI examined in this report, the scheme is also aimed at targeting emissions from vehicle.

The success of the scrappage scheme in other markets has proven it as a useful tool to boost consumer confidence in the market. Similarly in the case of Greece, BMI expects significant improvement in the sales for the passenger car segment this year while the commercial vehicle segment is likely to continue being hurt by the slowing economic climate. Major discrepancies already exist between the two segments with sales in the former falling by just under 22% year-on-year (y-o-y) in July while that in the latter fell by nearly 27.4% y-o-y. In view of the scrappage scheme, BMI has revised up its 2009 sales forecast to a 10% y-o-y fall, against 15% expected earlier. In 2010, sales will benefit only marginally from the slight relaxation in credit line towards year-end and the pre-empting of vehicle demand due to the scrappage scheme.

Besides the crisis, the Greek autos industry is likely to see a raft of regulatory changes this year, all of which are likely to shape the future of demand in the industry henceforth. The government is reportedly considering a major upheaval in the current road tax system. The changes are likely to run in favour of buyers opting for environmentally friendly vehicles while penalising those going for high emission ones.

The new tax system is likely to come into effect from November this year, in time for road tax payment for 2010.

Meanwhile, for the carmakers which are well-placed in the market, the current changes may help to strengthen their position in the market further. Toyota Motor occupied a solid 10.2% share of the market, leading way ahead of its nearest rivals Volkswagen (VW) and Opel with respective shares of 8.7% and 7.4% during 7M09. However, Audi stood out in the top-ten carmakers category by strongly bucking market trend with sales increasing by 30.8% y-o-y during the same period.