How to make the East a winner again

Douglas A. Bolduc is News Editor of Automotive News Europe
European countries east of Germany, Austria and Italy – such as Poland, Romania, Slovakia and the Czech Republic – used to be gold mines for Volkswagen, General Motors, Fiat, Peugeot and Renault.

Two years ago, central and eastern Europe's fast-growing economies were the engine of growth for the region's new-car sales.

Those days are over and won't return without some help.

“The lack of any formal incentive schemes, coupled with rising taxes and more stringent banking requirements has reduced consumer demand across the region," David Di Girolamo, head of UK-based market researcher JATO Consult, said in a statement earlier this month.

How bad were things in the East in 2009? Romania's sales were down 52 percent. Hungary fell 60 percent and Latvia lost 73 percent. The 11-country region declined by a combined 28 percent last year to 924,338 units.

The bottom line is that the East is in huge trouble. It is time for those countries to launch incentives. Even if they fail to match the sales magic recently created by scrapping subsidies in Germany, France and the UK, incentives in central and eastern Europe would provide some relief.

Most industry experts agree that overall new-car sales in Europe will be down by at least 1 million units in 2010.

Without some help from governments in the East, the decline will be much worse.