|BMI View Playing Out|
|Monthly Passenger Car Sales, CBUs|
Passenger car sales in Estonia increased 8.5% year-on-year (y-o-y), to 1,423 units in August. Over the first eight months of the year, sales in this segment have increased 19% y-o-y, to 11,872 units. We recently upgraded our 2012 sales forecast to 22% growth, based on a bounce-back from low sales volumes in previous years and buoyant consumer demand ( see our online service, August 24, 'Passenger Car Sales Surge On Consumer Demand'). We maintain this forecast for now.
BMI recently revised down our real GDP growth forecasts for Estonia to 2.2% in 2012, from 2.7% previously ( see our online service, August 15, 'Slower GDP Growth Expected'). Despite this, we expect consumer demand to remain resilient.
Retail trade continues to come in strong, with growth in the real retail trade index coming in at 8.1% y-o-y in June, down only slightly from 9.4% in May. In addition, the unemployment rate in Estonia fell to 10.2% in Q212 from 13.3% in the same period of 2011, below the eurozone average in June of 11.2%. Moreover, Estonian real wages have continued to rise, which when combined with relatively healthy household balance sheets and an improving labour market, will continue to keep private consumption well supported. BMI believes these factors will lead to increases in consumer spending and this will boost passenger car sales. This has partly informed our bullish forecast revision for sales growth in this segment.
As the graph below shows, passenger car sales in Estonia reached 30,912 units in 2007. By 2009, this figure had plummeted to 9,946 units. Since then, we believe growth in this segment has come from a 'bounce-back effect', as a result of previously pent-up consumer demand. This has partly informed our bullish forecast revision for sales in this segment.
|Passenger Car Sales, CBUs|