BMI's Executive Summary

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The Estonian automotive market is set for a slowdown in 2008 as consumers become more cautious about making high value purchases amid tougher lending conditions and the market reaches saturation point.

In 2007, automotive sales grew 26.0% y-o-y to 38,725 units, with passenger car sales up 25.8% and commercial vehicle sales up 27.0%. However, there were signs of a downturn in sales in Q407, with December seeing the first monthly year-on-year decline in sales in 2004. This coincided with a slowdown throughout the economy, with retail sales growth in decline. Car dealerships indicated that they expected the decline to continue into 2008, while others were more optimistic and predicted a soft landing in the car market. The consensus is that car sales growth is likely to be in the region of 10%. BMI is more pessimistic, forecasting sales growth of just 9.0% in 2008 with 34,782 cars sold. We expect the economic cycle to pick up in 2010, with a concurrent rise in car sales growth. By 2012, we expect car sales to reach just under 51,800 units, a still impressive 62.3% rise in sales over 2007 levels.

The commercial vehicles segment is also witnessing a slowdown due to a combination of the overall downturn in the economy and the problems affecting road freight transportation between Russia and Estonia. BMI anticipates that Estonia's commercial vehicle market will rise by 40.8% between 2007 and 2012, which is well below the 56.8% growth expected for the Baltic region as a whole. Lower rates of growth are related to an anticipated slowdown in road freight movements caused by Russia's decision to severely restrict Estonian truck movements. BMI believes that some road haulage firms are likely to go out of business, although some consolidation is likely.

Meanwhile, foreign investment in the parts sector should help the indigenous industry to continue to grow. We anticipate growth rates for this sector of between 10-15% per annum during the forecast period, in euro terms. Sales results from the Estonian seat belt manufacturer AS Norma in 2007 show that Russian sales remain buoyant. In H107, Norma's sales amounted to EEK595mn (EUR38mn), an increase of 12% y-o-y, with sales to Russian customers rising 55% y-o-y. Estonia's position as a low-cost automotive components manufacturer was further boosted in December 2007 when Stoneridge, a manufacturer of automotive electronics, announced plans to close its UK plant in Gloucestershire and move part of its electrical switches production to its Estonian subsidiary, Stoneridge Eesti.

Toyota remains the most popular brand on the Baltic passenger car market, with a 13% market share and 11,100 vehicles sold in 2007. The second most popular was Volkswagen with 8,990 registered new cars (10%), followed by Honda with 7,300 sales (8%). Toyota has the market lead in all three Baltic states, but the strength of other brands varies from market to market with Mazda particularly strong in Estonia, for instance.

Contents

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Chapter 1 – SWOT Analysis

Estonia Auto Industry SWOT

Chapter 2 – Europe Regional Market Overview

Production

Table: European Autos Production – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: European Autos Production By Group, H1 2006

Table: Central and Eastern European Car Assembly Plants, 2006 (Countries under review)

Table: The Rise In Central And Eastern European Production And Average Wages

Sales

Table: Europe Autos Sales – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: EU And EFTA Autos Sales By Group, H1 2006

Table: New Vehicle Registrations By Market In Europe (EU and EFTA), 2006

Table: New Car Registrations By Market In Europe (EU and EFTA), 2005

Competitive Landscape

Table: EU-15 And EFTA, Car Registrations, 2005

Table: Top 10 Best Selling Models In Europe, Jan-May 2006

Suppliers

Table: Top Five OEM Parts Suppliers, 2005

Regulation

Baltic Market Overview

Chapter 3 – Business Environment Rankings

Economics – Long-term Risk

Politics – Long-term Risk

CBU Output Growth

Vehicle Ownership/Penetration Potential

Regulation

Competitive Environment

Chapter 4 – Industry Forecast Scenario

Table: Estonia Automotive Sector Historical Data & Forecasts (CBUs unless otherwise stated)

Chapter 5 – Macroeconomic Forecast Scenario

Table: GDP, Output & Population

Country Snapshot: Estonia Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 6 – Special Focus: Commercial Vehicles

Regional Market Overview

Table: Regional Commercial Vehicle Market: Country Ranking, Sales

Table: Regional Commercial Vehicle Market: Country Ranking, Production

Table: Regional Commercial Vehicle Market: Company Ranking Of Significant Regional Manufacturers

Table: Recent And Planned Investments In Central And Eastern Europe

Baltics Market Overview

Table: Baltic Market, 2005

Table: Size Of Commercial Vehicle Market: Estonia

Table: Size Of Commercial Vehicle Market: Latvia

Table: Size Of Commercial Vehicle Market: Lithuania

Table: Baltic Market, Forecasts: 2010

Table: Commercial Vehicle Market Forecast: Estonia

Table: Commercial Vehicle Market Forecast: Latvia

Table: Commercial Vehicle Market Forecast: Lithuania

Chapter 7 – Competitive Landscape

Table: Estonia Passenger Car Sales 2004

Table: Estonia Commercial Vehicle Sales 2004

Chapter 8 – Company Monitor

Regional Case Study: Kia

Sales

Table: Kia Sales In Europe (EU and EFTA), By Model

Production

Table: Kia Production In Europe (EU, EFTA, Romania and Turkey), By Model

Company Profiles

Toyota

Inchcape (Mazda)

AS Norma

BMI Forecast Modelling

Automobile Industry

Sources

Appendix: Regional Demographic Data

Table: Wages (ave. labour force per annum), US$ PPP

Table: Population

Table: Household Spending Per Capita, US$

Table: Private Consumption Per Capita, US$ PPP

Table: Market Size, GDP, US$bn

Competitive Landscape for European Automotives: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Automotive Sources

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BMI's European Automotives Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: