BMI's Executive Summary

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Serbia's automotive market is set to sustain growth over the next five years, albeit at lower levels than 2007 when the country experienced a consumer boom. Private consumption in Serbia is buoyant, with overall retail sales growing 30.9% in the first four months of 2007, compared with 11.3% in the corresponding period in 2006. High credit growth and rising nominal wages are the main factors responsible for the high levels of consumer spending. BMI has therefore revised its automotive sales estimates for 2007 upwards to 70,355 units, compared to just under 63,600 units in our previous report.

Our estimates are based on 20% growth in car sales and 13.5% growth in commercial vehicle sales. In addition to lower interest rates and rising wages, the appreciation of the dinar has helped drive down the price of imported vehicles, which BMI estimates made up over 80% of new car sales in 2007. The macroeconomic situation is favourable to a sustained rise in automotive sales, with BMI forecasting sales reaching around 130,000 units by 2012.

Between 2007 and 2012, BMI forecasts a 70% increase in commercial vehicle sales. Serbia has been somewhat isolated from the growth in East-West trade and infrastructural developments, but still retains a truck manufacturing capacity in Zastava Kamioni. Under a national plan aimed at economic development and infrastructure upgrades, Serbia is allocating EUR1.68bn for capital investments in 2007, including the construction of two sections of a pan-European transport corridor. The corridor's development will enable Serbian road freight operators to capture a part of the trade flowing through the transit corridor. As a result, freight carried by road will grow by an annual average of around 7.0% in the 2007-2012 period. This will provide the impetus for average annual commercial vehicle sales growth of 11.7%.

The diversification of local car manufacturing should stimulate the automotive market. The Serbian government attempted some trade protection for the local automotive industry in order to generate demand for locally manufactured models and offset the effects of appreciation on the competitiveness of local producers on the Serbian market. Local production of Fiat Punto and Opel Astra models will reduce prices of popular models and stimulate demand. Production licences also involve tariff-free entry of Punto and Astra vehicles. National carmaker Zastava Automobili was due to go up for sale by tender by the end of 2007. By October, Fiat, General Motors (GM), Ford, India's Tata Motors and an unidentified Chinese manufacturer were all cited as potential bidders. Fiat is the frontrunner due to its long-standing technical tie-up with Zastava. Managers at Fiat have stated that they are not interested in an ownership stake in Zastava, but are open to any other ventures with the firm. This, coupled with the failure to privatise Zastava in the recent past, indicates that the firm will find it hard to achieve its objectives to increase its proportion of national car sales.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Serbian Danube/River Transport SWOT

Serbia Politics SWOT

Serbia Economic SWOT

Chapter 3 - Business Environment Overview

Table: Europe Business Environment Ranking

Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Freight Transport Growth

Transport Infrastructure Growth

Regulatory Environment

Competitive Environment

Transport Intensity Index

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Code/Corruption

Red Tape

Labour Force

Chapter 4 - Industry Trends And Developments

Road

Rail

Pipelines

Chapter 5 - Industry Forecast Scenario

Macroeconomic Forecast

Table: Nominal And Real GDP

Chapter 6 - Country Snapshot: Serbia 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: Wages Per Year

Transport Outlook

Table: Freight Transport Macroeconomic Indicators

Chapter 7 - Trade Environment

Chapter 8 - Market Overview

Multimodal

Infrastructure

Road

Rail

Air

Chapter 9 - Company Profile

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Transport Industry

Sources

Chapter 10 - Appendix: Regional Demographic Data

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

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

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: