automotive vehicle sales in cee how far can it go…?€¦ · light vehicle sales in east europe...

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Vehicle Sales in CEE – How Far Can it Go…? Light Vehicle Sales Forecast Scenarios in Central and East Europe

AUTOMOTIVE

Tatiana Hristova, Light Vehicle Sales Forecast Manager, CEE +49(0)69 20 973 331, [email protected]

26 January 2017 | Frankfurt, Germany

© 2017 IHS Markit 2

2017 New Year’s Briefing | 26 January 2017

Contents

• Vehicle Sales in Central Europe

Is there more potential for growth?

• Vehicle Sales in East Europe

Which markets can bring incremental volumes?

What are the obstacles for growth?

What is going on in Russia?

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Light Vehicle Sales in Central Europe Poland and Czech Republic leading sales in the region

3

CE Share 6.4%

CE Share 6.8%

CE Share 7.9%

2006

~1.4m

2016

~1.3m

2026

~1.8m

Total European Sales



Other (50%) - Serbia +9.8%*

Romania +8.0%* Bosnia-Herz. +5.8%*

Croatia +4.0%* *CAGR (2016-2026)

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Vehicle Sales Evolution in Central Europe Optimistic and pessimistic scenario

0

500000

1000000

1500000

2000000

2500000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

CE Base CE Opt CE Pes

4

• Stable econ growth • Subsidy programs • Reduced demand

for used cars

• Decrease in incomes • Strong emigration • More used cars

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Scenario Assumptions Available resources restricting faster growth

Pessimistic

Scenario

Optimistic

Scenario

5

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Vehicle Sales Evolution in Central Europe Optimistic and pessimistic scenario – Scenario probabilities

6

10%

20%

70%

Scenario Probability

0

500000

1000000

1500000

2000000

2500000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

CE Base CE Opt CE Pes

• Stable econ growth • Subsidy programs • Reduced demand

for used cars

• Decrease in incomes

• Strong emigration • More used cars

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EE share 14.5%

EE share 13.2%

EE share 22.1%

Light Vehicle Sales in East Europe Substantial uncovered potential in the region

2016

~2.6m

2026

~4.9m

*CAGR (2016-2026)




Other (15%) - Ukraine +17.8%*

Uzbekistan +6.5%* Kazakhstan +18.2%*

Belarus +8.3%*

2006

~3.1m

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Light Vehicle Sales in East Europe Huge potential in the region restricted by unfavorable environment

8

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

EE Base EE Opt EE Pes

10%

30%

60%


• Oil price >80USD/bar in the short term

• Reforms in pol and econ starting ‘18

• Geopolitical improvements

• Oil price below 50USD/bar • Low production • Slumped crediting market • Sanctions prolongation

beyond 2017

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•Unpredictable events leading to political tensions and economic constrains

•Sanctions to end mid 2017 (Trump implications?)

•Oil prices to recover to 80USD (critical level for Russian budget) by 2021

•and reach the desired 100USD by 2024

•Current oil extraction on record level

•Lack of institutional reforms

•Insufficient success in anti-corruption campaign

•Most of diversification projects turned ineffective

•Huge dependence on energy exports remains

•Reform of financial system

Economics Politics

Geo-Politics

Energy Prices

Market Assumptions

Russia - Forecast Assumptions Market in a deep stagnation – but recovery already in sight

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Russia - Governmental Support Same money, different channels

11

Russian Stimulus Program

- Started in Sept.2014, expected to end Dec.’16

- Only for families or first time purchase next

year

- ~890K vehicles sold, ~500K incremental – 80K

total payback

Subsidy Program

(3rd round)

- Started in 2015 and should end by mid 2017

-2/3 of the key policy rate reimbursed

-~1/2 of all car loans were subsidized in 2015 and

2016

Direct OEM’s Support

- Direct subsidies will be reduced in 2017

-Export subsidies

- High import barriers

- Special Investment Contracts to replace

Decrees 166

Couple more programs under consideration – e.g. circulation tax withdrawal for companies,

LCV purchasing program

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Russia – Short Term Development Market reached is bottom – stagnation is expected

-5,00

-4,00

-3,00

-2,00

-1,00

0,00

1,00

2,00

3,00

4,00

2013-Q

1

2013-Q

2

2013-Q

3

2013-Q

4

2014-Q

1

2014-Q

2

2014-Q

3

2014-Q

4

2015-Q

1

2015-Q

2

2015-Q

3

2015-Q

4

2016-Q

1

2016-Q

2

2016-Q

3

2016-Q

4

2017-Q

1

2017-Q

2

2017-Q

3

2017-Q

4

2018-Q

1

2018-Q

2

2018-Q

3

2018-Q

4

Real GDP Growth, quarterly, Year-on-Year, %

First positive rate in 2Q2017 will be translated into the vehicles sales

market in the 2H 2017

-50,00%

-40,00%

-30,00%

-20,00%

-10,00%

0,00%

10,00%

20,00%

30,00%

2013-Q

1

2013-Q

2

2013-Q

3

2013-Q

4

2014-Q

1

2014-Q

2

2014-Q

3

2014-Q

4

2015-Q

1

2015-Q

2

2015-Q

3

2015-Q

4

2016-Q

1

2016-Q

2

2016-Q

3

2016-Q

4

2017-Q

1

2017-Q

2

2017-Q

3

2017-Q

4

2018-Q

1

2018-Q

2

2018-Q

3

2018-Q

4

Russia, Light Vehicles Sales, Year-on-Year, %

What looks like a strong growth, isn’t really –low comparison base makes the growth rates

high, but volumes are still very low

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Russia – Specific Contingency Forecast 3m mark reachable only in optimistic scenario

13

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Russia Russia Opt Russia Pes

• 80USD/bar by mid ‘18, 100USD/bar by ‘21 • Election campaign with stimulus programs • Notable improvements in econ reforms

and anti-corruption programs after ’18 • Full sanctions withdrawal mid 2017

• 80USD/bar by mid ‘24, 100USD/bar by ‘30

• Sanctions prolongation (long term sanctions)

• Slow down in reform programs

• 80USD/bar by ‘21, 100USD/bar by ‘24 • Sanctions to end mid 2017, long term

sanctions to remain • Stagnation in econ and pol reforms

20%

15%

65%


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Premium and LCV Market Pent-up demand on the LCV market, pay-back on the Premium

14

0

50000

100000

150000

200000

250000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

LCV+HVAN

0

50000

100000

150000

200000

250000

300000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

Prem+Lux

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automotive vehicle sales in cee how far can it go…?€¦ · light vehicle sales in east europe...

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