Market Report, "Romania Autos Report Q2 2011", published

PRLog (Press Release)– Apr 27, 2011– Sales in Romania have been hit heavily by the global financial crisis, and this trend does not look like it will let up dramatically. A combination of tightening credit and increased taxes look set to stop any major growth of new car sales. These forces combined with limited consumer spending and high levels of debt will affect the sales results of FY10 and through into 2011. Last year saw total vehicle sales total 146,543 units, with BMI forecasting sales to reach 185,710 by 2015.

Romania faces another year of fiscal austerity in 2011, adding to the painful consolidation programme already introduced in 2010. With this in mind, we do not expect the Romanian economy to bounce back strongly from a 1.9% contraction in 2010, and forecast real GDP to rise by just 2.1% in 2011 - compounding the budgetary challenge facing the government. Recovery in the autos sector could be hampered after the Romanian government decided to raise the country's pollution tax by up to 45-50% starting from January 1 2011. BMI sees the regulation has an attempt to clamp down on the import of used cars into the country as well as increase the penetration of low carbon emitting vehicles there.

Laszlo Borbely, Romanian Minster of Environment and Forests, revealed that the pollution tax payable will be primarily based on the engine capacity of the car and its age, and will be progressive for vehicles older than 10 years. The need for such a clause is due to the fact that more than half of the nearly 120,000 cars imported into the country during 2010 were aged older than 10 ye aston martin ars. As such, the highest pollution tax has been slammed on cars older than 20 years and equipped with 3,200cc non-Euro engine. It is estimated that on average the used car segment will bear nearly a 50% increase in pollution tax.

Despite these wider problems, Dacia is still performing. Increased demand in its major export markets meant 2010 marked the sixth consecutive year of output growth for Dacia Automobile, local news source zf.ro has reported. The company reportedly exported 300,000 vehicles, worth EUR2.5bn, last year, helping it achieve nearly a 15% y-o-y rise in production, to 340,000 units, during the year. With the overall European market down almost 5% y-o-y during 2010, Dacia's production growth highlights the success of the Romanian brand and bodes well for the company's strategy to significantly reduce its reliance on the domestic Romanian market. More importantly, however, these results make Dacia an exception to BMI's long-standing view that impending emission regulations in Europe will curb demand for sport-u acura tility vehicles (SUVs) in the region.

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