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Volatility Hits Central Europe Vehicle Sales Again

10 October 2000

Volatility Hits Central Europe Vehicle Sales Again

    LONDON, Oct. 10 http://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."