Car Makers Looking to the East for Growth

The IAA auto show is underway in Frankfurt, and car manufacturers are facing east in the expectation that that is where sales will continue to expand.

Eastern Europe is buying up cars at a fast pace, and has been for the past few years as the population’s affluence grows. In Poland sales rose by 15.5% year-on-year during the first three months of 2017, to 277,000 cars. That figure makes it the seventh largest market for cars in Europe.

Analysts believe car sales will rise to a record 1.3 million in the region from Estonia in the north to Bulgaria which borders the Black Sea. That is an increase of 10 percent, year-on-year.

“Economic growth in the region and the relative lack of market saturation in motor vehicles are the factors underpinning” growth in the east, said one expert.

The Czech company Skoda is not the only car maker headquartered in the east, but it is the largest. It has 17% of all sales. Skoda is a subsidiary of the huge German car company, Volkswagen. The Volkswagen brand is the second best-selling car in Europe, while Japan’s Toyota is the third.

Manufacturers are flocking to Eastern Europe, too. PSA, the parent company of Peugeot recently took over Opel, a German car maker, including their plants in Hungary and Poland. There are plans now to build a $1.2 billion factory in Slovakia to produce Jaguar Land Rovers by 2018.

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