Industry Trend Analysis - Eastern Europe To Offer Better Growth Opportunities - DEC 2017

BMI View: Vehicle sales growth in the CEE region will outperform the rest of Europe as rising wages, a low interest rate environment and low household indebtedness encourages spending on new big-ticket items. With the expectation of the UK, Western Europe vehicle demand will remain strong fuelled by growing employment, low inflation and rising wages. At the same time, vehicle sales in Russia and Eastern Europe will benefit from a broad economic recovery in the region.

In 2017, we expect vehicle sales in Europe to grow 3.2%, a contrast to the continuous accelerations in sales growth experienced over the previous four years. While the growth marks a slowdown, Europe's sales still appear to be built on a solid macroeconomic footing across the European Union and on the beginnings of a modest recovery in Russia and the Commonwealth of Independent States (CIS). However, some key markets in the region, such as Turkey, are still set to be hit by autos sector-specific shocks that are souring the prospects for sales growth.

On a country-by-country basis, the picture is overwhelmingly positive in Europe but with some key exceptions. On the one hand, Central and Eastern European (CEE), Nordic countries, most Western European countries and a number of smaller Mediterranean markets are set for a strong year of growth as similar macroeconomic growth drivers from 2016 remain in place. Eastern European markets, particularly Russia and the Ukraine, will also shift into a period of growth as they emerge from recessions.

Slowing But Still Promising
Europe (Region) - Vehicle Sales Forecast, Units
Source: BMI calculation

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