Volkswagen AG has built its auto-sales lead in Eastern Europe into the strongest position of any manufacturer in the region since the end of Communism, bolstering its edge in market share over nearest rival Fiat SpA to 15.5 percent points in first-quarter 2001 from 3.6 percent points in first-quarter 2000.

The German group, ranked first in regional sales since 1996, climbed higher, while the market fell further. Overall demand, already down 16.0% in 2000, dove 13.4% to 255,696 in January-to-March 2001 from 295,122 in January-to-March 2000 for 11 countries reporting reliable statistics - Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. (Data cover new vehicles not over 3.5 tonnes gross weight.)

VW, also the biggest player in Western Europe over the past 10 years, overcame the adversity better than any big contender. Its first-quarter turnover jumped 15.8% to 73,389 in 2001 from 63,362 in 2000, hoisting its market share to 28.7% from 21.5%. (Other sales increases above 10% were limited to companies retailing under 5,000 vehicles - 17.7% by DaimlerChrysler AG with volume of 4,088 and 11.7% by Bayerische Motoren Werke AG with volume of 813.)

VW's performance was cushioned by the relative stability of its main market, Czech Republic, down only 2.1%. The country is home to Skoda, which generated 63.1% of total turnover of the German group (also comprising Audi and SEAT plus exclusive lines Bentley, Bugatti, Lamborghini and Rolls-Royce). Skoda, up 21.8% to 46,318 in first-quarter 2001 from 38,016 in first-quarter 2000, owed its strength partly to the success of its new small vehicle Fabia. The Czech company is expected to introduce a new model to its car range at the Frankfurt motor show in September 2001.

Skoda Fabia

Fiat, first in sales in Eastern Europe from 1993 to 1995, stayed in second place, though it endured the brunt of the market malaise. First-quarter volumes tumbled 36.0% to 33,879 in 2001 from 52,942 in 2000, while share sunk to 13.2% from 17.9%. The Italian group (including Alfa Romeo, Iveco and Lancia plus prestige brands Ferrari and Maserati) suffered especially because 76.7% of its sales were in the region's largest country, Poland, where demand dropped 31.5%.

Historically, Fiat has been the preeminent foreign producer in the old East bloc, playing a pivotal role in establishing Poland's car industry in the 1920s. But the Italians have not sustained an industrial presence elsewhere in the region, while VW now assembles or manufacturers vehicles in Czech Republic, Hungary, Poland and Slovakia.

Fiat risks falling into third place in regional sales, behind Renault SA, which has been empowered by its acquisition of SC Automobile Dacia SA of Romania in September 1999. The French group, an indeterminate force in Eastern Europe in the 1990s, upped sales 7.3% to 31,753 in January-to-March 2001 from 29,592 in January-to-March 2000, cutting the gap with Fiat 90.9% to 2,126 from 23,350.

After plans to modernise its outdated products were publicised in late 1999, Dacia lost tens of thousands of potential customers in Romania, who postponed buying available domestic vehicles to wait for improved offerings. But sales have begun to recover, following the launch in October 2000 of SupeRNova, an upgrade of Dacia's Nova hatchback. First-quarter turnover of Dacia increased 34.7% to 11,983 in 2001 from 8,899 in 2000, the biggest percent rise of a major mark. Dacia may enjoy an even brighter future, as it expects to launch a new model (code-named X90) as early as 2003 with a base price of Euro5,000.

Fiat, Renault and VW alone sold over 25,000 in first-quarter 2001 - together corralling 54.4% of demand. After them were PSA Peugeot Citroen (24,591), Daewoo Group (23,225), General Motors Corp (16,879), Ford Motor Co (9,664), Suzuki Motor Corp (8,592), Toyota Motor Corp (6,820) and Hyundai Group (5,752). No others eclipsed 5,000.

EASTERN EUROPE
Q1 2001
Q1 2000
Q1 2001
Q1 2000
2001 / 2000
Sales of Light Vehicles
% Share
% Share
Units
Units
% Change
Volkswagen AG
28.7
21.5
73389
63362
15.8
Skoda
18.1
12.9
46318
38016
21.8
VW
7.6
5.8
19341
17027
13.6
SEAT
2.4
2.4
6165
7041
-12.4
Audi
0.6
0.4
1565
1278
22.5
Fiat SpA
13.2
17.9
33879
52942
-36.0
Fiat
12.6
17.5
32209
51526
-37.5
Alfa Romeo
0.4
0.4
960
1047
-8.3
Other
0.3
0.1
710
369
92.4
Renault SA
12.4
10.0
31753
29592
7.3
Renault
7.7
7.0
19770
20693
-4.5
Dacia
4.7
3.0
11983
8899
34.7
PSA Peugeot Citroen
9.6
7.9
24591
23384
5.2
Peugeot
5.7
4.6
14528
13698
6.1
Citroen
3.9
3.3
10063
9686
3.9
Daewoo Group
9.1
15.0
23225
44316
-47.6
Daewoo
9.1
14.8
23212
43736
-46.9
Other
0.0
0.2
13
580
-97.8
General Motors Corp
6.6
7.3
16879
21654
-22.1
Opel
6.5
7.3
16701
21517
-22.4
Saab
0.1
0.0
176
137
28.5
Other
0.0
0.0
2
0
-
Ford Motor Co
3.8
4.5
9664
13410
-27.9
Ford
3.4
4.1
8688
12034
-27.8
Volvo
0.3
0.4
772
1163
-33.6
Land Rover
0.1
0.1
178
161
10.6
Other
0.0
0.0
26
52
-50.0
Suzuki Motor Corp
3.4
2.9
8592
8529
0.7
Toyota Motor Corp
2.7
2.6
6820
7781
-12.4
Toyota
2.7
2.6
6818
7771
-12.3
Other
0.0
0.0
2
10
-80.0
Hyundai Group
2.2
3.2
5752
9496
-39.4
Hyundai
1.3
1.5
3436
4482
-23.3
Kia
0.9
1.7
2316
5014
-53.8
DaimlerChrysler AG
1.6
1.2
4088
3473
17.7
Mercedes-Benz
1.5
1.1
3842
3117
23.3
Chrysler
0.1
0.1
240
272
-11.8
Other
0.0
0.0
6
84
-92.9
Nissan Motor Co Ltd
1.6
1.7
4039
5065
-20.3
Mazda Motor Corp
1.1
0.9
2837
2672
6.2
Honda Motor Co Ltd
0.8
1.2
2115
3474
-39.1
Mitsubishi Group
0.5
0.5
1221
1570
-22.2
AO AvtoVAZ (Lada)
0.4
0.4
1024
1189
-13.9
Bayerische Motoren Werke AG
0.3
0.2
813
728
11.7
Other
2.0
0.8
5015
2485
101.8
TOTAL
100.0
100.0
255696
295122
-13.4
SOURCE just-auto.com

The major player hit hardest by market turbulence has been Daewoo. Its performance in Eastern Europe once seemed immune to its fight against bankruptcy in Korea, and the company looked ready to rout VW over much of 1998 and 1999.

But, after seven-straight years of astonishing conquest sales in the former Communist bloc through 1999, Daewoo now seems to be surrendering gains as fast as it achieved them. Its first-quarter volume plunged 46.7% in 2001 from 2000, and market share recoiled to 9.1% from 15.0%, the biggest backslide of any auto group.

As concerns about the company's future intensified last year, consumer confidence in Daewoo started to wither across Eastern Europe, especially in Poland, where the automaker has its biggest factories in the region.

Uncertainty over Daewoo complicates the competitive landscape.

If GM buys the Korean company, its market share in Eastern Europe would rise to 15.7% from 6.6% with sales of 40,104, based on results from first-quarter 2001. But the US automaker owns 20.0% of Fiat, which in turn holds 5.6% of GM. So a tightened Fiat-GM alliance with Daewoo, representing a combined 28.9% of sales in Eastern Europe, could face monopoly concerns in key markets like Poland, where Daewoo, Fiat and GM each run major plants. (The favourable impact on GM's market share is underestimated here, as calculations capture Daewoo at its nadir.)

But potential suitors for Daewoo have been wary of absorbing the full palette of factories (many under-utilised), so the automaker's creditors may break apart the company to offer different chunks to separate bidders. Under a scenario that has been contemplated, GM could acquire the Korean operations, while Hyundai could buy Daewoo's foreign plants, including sites in Eastern Europe. (In February 2001, though, Hyundai officially denied interest in these divisions.)

EASTERN EUROPE
Q1 2001
Q1 2000
Q1 2001
Q1 2000
2001 / 2000
Sales of Light Vehicles
% Share
% Share
Units
Units
% Change
Poland
40
50.6
102156
149187
-31.52486477
Czech Republic
15.4
13.6
39278
40124
-2.108463762
Hungary
14.6
12.5
37256
36954
0.817232235
Romania
7.3
5.1
18614
15034
23.81269123
Croatia
6.8
4.2
17291
12504
38.2837492
Slovenia
6.3
6.9
16197
20274
-20.10949985
Slovakia
6.1
4
15594
11882
31.2405319
Estonia
1.3
1.1
3320
3117
6.512672441
Bulgaria
1.1
1
2797
3068
-8.833116037
Latvia
0.7
0.5
1768
1553
13.84417257
Lithuania
0.6
0.5
1425
1425
0
TOTAL
100
100
255696
295122
-13.35922093
SOURCE just-auto.com

Among countries, Poland remained dominant, despite the drop in its volume to 102,156 in 2001 from 149,187 in 2000. It still captured a remarkable 40.0% of regional sales, and it was the ninth-largest market for vehicles in all of Europe (behind Belgium).

Romania, down 28.1% in 2000, turned around dramatically, following the recovery of Dacia, which represented 64.0% of demand there. In the first quarter, the market expanded 23.8% to 18,614 in 2001 from 15,034 in 2000, the third-highest percent increase in the region, behind 38.3% in Croatia and 31.2% in Slovakia.

Slovenia, the most developed economy in the old East bloc, still boasted the best record in per-capita sales of new autos, but its first-quarter turnover retreated 20.1% to 16,197 in 2001 from 20,274 in 2000.

In sales per 1,000 people in January-to-March 2001, Slovenia had 8.5 units. This compares with 3.9 in Croatia, 3.8 in Czech Republic, 3.7 in Hungary, 2.9 in Slovakia, 2.6 in Poland, 2.4 in Estonia, 0.8 in Romania, 0.7 in Latvia, 0.4 in Lithuania and 0.3 in Bulgaria.


Contact Ryan James Tutak, associate editor of just-auto.com for Eastern Europe:
E ryan.tutak@just-auto.com
F +36-1 / 317-7257
T +36-1 / 266-2693

To view related research reports, please follow the links below:-

The automotive industry of central and eastern Europe

The world's car manufacturers: A financial and operating review