Economic Forces To Negate Price Reduction Benefits

The deal between Serbia and the EU calling for a reduction in custom duties on new imported vehicles from 5% to 2.5%, which came into effect from January 1, is unlikely to bolster consumer confidence and hence vehicle sales in Serbia. We believe that the weak domestic picture, constrained credit and poor export revenue from the crisis-stricken EU - its principle revenue earner - will keep consumer spending curtailed to a modest 5.2% year-on-year (y-o-y) growth in 2012. Sales over the rest of the forecast period to 2016 could be more robust as economic conditions improve, but are likely to

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