Frost & Sullivan: While CEE Car Markets Remain Volatile, Russia Takes the Tough Road to Recovery

LONDON, May 24, 2010 - As expected, the European car market has been losing steam as
cash-for-clunkers scrappage schemes wind down. Both Germany and Italy, which
together generated 37 per cent of European car sales in April 2010, saw sales
fall by 32 per cent and 16 per cent respectively compared to April 2009.
Although the total European new car market contracted by 7.4 per cent
compared to last year, it grew by 4.8 per cent between January-April. Frost &
Sullivan estimates that although 4-month YTD figures in Europe remain
positive (+4.8 per cent), April numbers may be pointing to the beginning of a
negative trend for 2010, especially with scrappage schemes ending in large
markets like France and Spain.

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At the same time, the Russian economy is looking up, luring people back
to the showrooms. "The 20 per cent jump in April is just what the Russian
automotive industry needed after a depressing 2009," argues Frost & Sullivan
Research Analyst, Vitaly Belskiy. "However, it is too early to be overly
optimistic. April 2009 figures were down by 53 per cent down compared to
2008. In other words, the Russian light vehicle market is still leagues away
from its potential- precisely, 44 per cent away (April 2010 to April 2008)."

Scrappage schemes successfully bolstered the auto industry throughout
Europe, and, even though they were introduced late and not properly
coordinated in Russia, they are working there too. The big question now is
what happens when government funds dry up. To some extent, the Russian car
market will have to contend with the problems of Germany and Italy. If demand
meets incentive funds, cars sold through the incentive will account for
roughly 13 per cent of the market.

"The light vehicle market in Russia will likely gain momentum later this
year, reaching up to 1.6 million units, as the economy and consumer
confidence improve," states Belskiy. "Nevertheless, slumping European car
sales, even in relatively strong CEE countries like Poland, indicate that new
car markets remain highly volatile everywhere."

For more information on this subject, or if you would like to speak with
the author, please e-mail Monika Kwiecinska, Corporate Communications, at
monika.kwiecinska@frost.com, with your full name, company name, title,
telephone number, company e-mail address, company website, city, state and
country.

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Contact:

    Monika Kwiecinska
    Corporate Communications - Europe
    P: +48-22-390-4127
    F: +48-22-390-4160
    E: monika.kwiecinska@frost.com

www.frost.com

Monika Kwiecinska, Frost & Sullivan, Corporate Communications - Europe, +48-22-390-4127, fax, +48-22-390-4160, monika.kwiecinska at frost.com