New passenger car sales in Latvia grew by 78% year-on-year (y-o-y) during 2011, to 8,849 units, according to figures released by the Latvian Authorized Automobile Dealers Association (LAADA). New commercial vehicle sales grew by 152.4% y-o-y, to 3,062 units, giving a total new vehicle sales figure of 11,911 units for the year. This upward growth trend has continued into 2012, with passenger car sales increasing by 12% y-o-y over the first eight months of the year, to reach 8,750 units. Commercial vehicle sales were also up by 10% over the same period, to reach 974 units.
Against this positive backdrop, BMI has revised up its 2012 new passenger car sales forecast to a growth rate of 15%. With commercial vehicle sales set to increase by 10%, this equates to 13.7% annual growth across the new vehicle sales market as a whole. The forecast is based on a strong bounce-back from low sales volumes in recent years, coupled with buoyant consumer demand. Further supporting our optimistic view has been the country's impressive economic performance of late, with Q212 GDP coming in at 5 %y-o-y, the fastest rate of growth across the eurozone. This strong figure has led BMI's macroeconomic team to revise up its end-2012 real GDP forecast for Latvia by 1.1 percentage points (pp), to 4.2%.
Moreover, inflationary pressures are continuing to abate within Latvia at the present time, with inflation falling by 0.3% month-on-month (m-o-m) in August 2012, and with annual inflation heading towards the 3% level required for euro currency membership. Falling inflation has allowed the Bank of Latvia to cut interest rates three times in 2012 (March, July and September), with lower rates likely to feed into cheaper car financing deals for Latvian consumers. Already, in H112, the Baltic News Network cited the head of Swedbank's Private Financing Division, Dzintars Kalnins, as saying that car leasing was on the rise across all segments, with the highest lending going to customers between the age of 26 and 31.
Against this backdrop, BMI remains optimistic on the longer term outlook for the Latvian new vehicle sales market, forecasting total vehicle sales to more than double between end-2012 and end-2017. BMI believes that Latvia will not return to pre-2008 crisis levels of new car sales by 2017. The main threat to our new car sales forecasts remains a chaotic break-up of the eurozone, with the risk remaining that Greece may have to default in 2013.
In terms of manufacturers, Germany's Volkswagen (VW) has now cemented its dominance over previous top-seller Toyota Motor, having overtaken it in 2011. Looking at data for the month of August 2012, VW held a market share of some 15.3% across the passenger car segment, followed by Toyota (11.2%) and Peugeot (8.1%).
Other key players on the Latvian new vehicle market include Nissan and Skoda in the passenger car segment and Volvo and DAF Trucks in the commercial vehicle segment.The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
Click for Report details:Latvia Autos Report 2013