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02.11.2009

Bank Austria Economics sector report:
Healthy new car sales in Austria, but dealer revenues faltering

  • An increase of 7 per cent in new vehicle registrations as of September
  • Dealer sales declining; minus of 9 per cent as of July
  • Increased thinning of the dealer herd expected in 2010
  • Automobiles becoming less important for consumers because of significantly increased operating and service costs

With approximately 320,000 new vehicles sold, 1992 is still the record year for Austrian automobile dealers. Since then, new vehicle registrations have been between 280,000 and 310,000 automobiles per year, with 294,000 in 2008. It is remarkable that the 310,000 mark is likely to be broken again in the recession year 2009. The number of new vehicles registered had already increased by 6.7 per cent as of September. A result that is not only the result of the "cash for clunkers" programme, but also of successful dealer selling efforts, as evidenced in a current sector analysis by Bank Austria Economics.

But as new registrations have increased, dealer sales have been hit by a serious slide. As of July, automobile sales had already fallen by 9 per cent. The sector has been able to compensate for some of the decline in new vehicle sales through increases services and accessories sales, but there is no way around an overall minus in sector-wide sales in annual comparison. After roughly EUR 26.6 billion in revenue from vehicle sales and repairs in 2008, this figure is likely to be well below EUR 26 billion in 2009.

The primary reasons for this decline in revenues in spite of good sales volume in the Austrian automobile sector are the high share of lower-priced and lower-performance small cars leaving the lots, as well as high discounts and a significant decline in demand for utility vehicles. The registration of new lorries, about 10 per cent of all new vehicles sold, was down by a hefty 26 per cent as of September. "Under these conditions, it is surprising that we have not yet seen an increase in the closure of automobile dealerships," said Bank Austria economist Günter Wolf. Last year, 209 bankruptcies were reported in the entire sector, primarily dealers and service garages, the same number as in 2007. As of September of this year, the number of bankruptcies among automobile dealers in Austria was 20 per cent lower. Günter Wolf: "In light of the expected lacklustre development of the economy in 2010 and the fact that many planned vehicle purchases were made already in 2009 instead of next year, we expect to see more dealerships closing their doors. The projections for this in Germany show where Austria is also headed."

"The automobile has lost some of its status among Austrian consumers in recent years," noted Wolf, the author of the study. While the average Austrian used 4 per cent of his or her household budget for the purchase of vehicles in the 1980s and 1990s, this declined to just 3 per cent or EUR 4.7 billion in 2008. The relative decline in spending for vehicle purchases and the decline in demand for automobiles in the last four years as measured by the number of new vehicles registered and also the overall shift towards lower-performance, cheaper cars can above all be attributed to rising fuel costs. Austria’s households have consistently used roughly 10 per cent of their disposable income for the purchase, operation and maintenance of their vehicles for several years, which amounted to EUR 15.8 billion in 2008. All in all, the relative savings in purchase costs have been eaten up by the significantly higher fuel and maintenance costs.

Enquiries: Bank Austria Press Office Austria
 Tiemon Kiesenhofer, tel. +43 (0) 50505 - 52819
 E-mail: tiemon.kiesenhofer@unicreditgroup.at

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