SOFIA, Bulgaria - Bulgaria never had an auto manufacturing operation that succeeded long-term, but it expects a permanent bump in car sales as it prepares to join the European Union.
One reason past production schemes - the Fiat 124 and Renault Bulgarrenault in the 1960s; Moskvich in the 1970s; and the Rover Maestro in the mid-1990s - failed is the modest volume of Bulgarian new-car sales.
Today, far more cars enter the market as used imports than as new cars.
Bulgaria is the only country in eastern Europe that has no technical or environmental requirements on vehicle imports.
New-car sales fell to 7,797 units in 1997 from 19,839 in 1992, then stabilized at 12,000 to 14,000 through 2002. But last year, sales jumped to 25,786, up almost 50 percent from 17,220 in 2003.
The number of imported used cars is growing even faster, reaching 161,000 last year from 104,000 in 2001.
Auto marketers expect the Bulgarian government will regulate used-car imports before the country joins the EU, which could happen as early as January 2007. That would help avoid a situation similar to Poland's disruptive flood of used-cars last year.
Pending EU membership has affected the Bulgarian market slightly since 2002, said Stefan Hadjinikolov, chairman of the Union of Automobile Importers in Bulgaria.
"The market will keep growing strongly for the next seven or eight years, then reach a level of saturation at 70,000 to 90,000 new vehicles a year," he said. Used-car imports will be about the same level as new cars by then, he said.
Harmonizing national laws with the EU should not take long, but Hadjinikolov doesn't expect any action soon.
"The country is entering an election period and politicians have pushed those matters to the back," he said.
Dealers get ready
Bulgarian dealer groups already are gearing up to comply with EU new-car sales rules.
Georgi Krumov, manager of Auto Union Holding, which represents Mazda, Fiat, Lancia, Alfa Romeo, Opel and Chevrolet, says being ready for EU membership takes financial investment, serious marketing efforts and making a personal connection with international managers for each of his brands.
Auto Union has invested heavily in showrooms and service centers.
Krumov says that most market leaders have new showrooms - such as Sofia France Auto for Peugeot; Promobile for Renault; and Moto Pfohe for Ford brands. But even smaller dealer groups have opened multimillion-euro dealerships.
EU rules already apply here to some extent: Opel has four openly competing dealers in Sofia.
Volkswagen group has appointed Porsche Holding as its sales representative for Bulgaria, following VW's pattern in most of central and eastern Europe. Some manufacturers are expected to enter the market directly, such as PSA/
Peugeot-Citroen and the Renault-Nissan alliance.
Automotive leasing is playing a significant role in boosting sales volume.
Sofia France Auto, Promobile and Moto Pfohe offered the country's first car leasing schemes in the late 1990s. In 2003, other foreign banks and leasing companies entered the market as leasing became popular. Common incentives include down payments of 10 percent or free vehicle insurance.