www.just-auto.com — Research from Standard and Poor’s carried on the just-auto.com web site indicates that in the first half of 2000, the volatility of car demand in Central and Eastern Europe is again apparent. The broad trend in demand is clearly upwards. However, each economy is following its own growth path and fluctuations in important variables, such as interest and exchange rates, excise taxes, or model offerings, which have led to rapid and volatile swings in consumer behaviour.

Since incomes are generally low through the region, consumers buying cars are often highly sensitive to interest rate movements and tax rises. Even the prospect of a change in tax or interest rates can lead to a radical shift in buying, as we saw in Poland and Turkey in late 1999. Thus, the level of variables (such as interest rates) and their rate of change determine movements in car demand. In some economies, such as Poland and Turkey, we have seen rapid and foreseeable interest rate and tax changes leading to high volatility in demand.

just-auto.com’s Managing Editor, David Leggett, commented: “The situation in Central and Eastern Europe remains volatile, but at least things are moving in the right direction. Even in Russia, the trend is still upwards.”

Read the full Standard and Poor’s article on the just-auto.com website at: www.just-auto.com/features_detail.asp?art=299

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