PRLog (Press Release) – Apr 16, 2011 – BMI expects little respite for the Greek automotive market despite the introduction of the vehicle scrappage scheme on February 21 2011. While the government is hoping that the measure will boost its tax revenues, BMI believes the scheme may prove to be ineffective as Greece's high level of taxation on the purchase of new cars and high ownership costs are likely to deter consumers from buying new vehicles this year.
BMI, accordingly, maintains its forecast for passenger car sales of nearly 135,000 units in 2011. Weakening business confidence will mean that commercial vehicle sales on the other hand are expected to fall at least 5.5% y-o-y this year. The net result will be nearly a 5% y-o-y drop, to just under 147,500 units, in total vehicle sales this year.
Given Greece's deteriorating economic fundamentals and broader risk profile, the private sector is set to face higher borrowing costs over the medium term, which will further dampen growth in new vehicle sales. BMI does not expect to see a recovery in sales to pre-economic levels during our forecast period to 2015. Vehicle sales growth is likely to be slow, averaging 2.2% y-o-y betwe bmw M5 specification en 2012 and 2015, with 160,800 units shifted in 2015.
Despite the depressed demand, some carmakers increased their market share during 2010. Toyota Motor performed relatively well, improving its share in both the passenger car and commercial vehicle segments.
We expect the auto industry in Greece (along with the Baltic States) to be a significant underperformer in Europe, thanks to widespread household and businesses retrenchment, a near 20% unemployment rate and weak corporate profitability. Placed second from bottom in BMI's Risk/Reward Ratings for the auto industry in Europe, Greece not only suffers from poor scores in the auto market, but also in terms of its country risk score. Furthermore, we see little likelihood of it gaining a production facility in the near future.
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