Bulgaria, a medium market located in Central and Eastern Europe has a population of 7.7 million. In 2007, the GDP (Gross Domestic Product) was 3.747 EUR when the average income was 217 EUR per month, which made Bulgaria one of the top of the list of poorer countries in the Central and Easter European markets. With an average of 5% Gross Domestic Product (GDP) rate of growth and constant prices, Bulgaria has a fast growing economy that is outpacing growth economies in other European countries, plus there is the possibility of a substantial grey Bulgarian economy.
Bulgaria’s salvage car penetration has proven to be one of the highest ones within Central and Eastern Europe, although it is about 20% lower than France, for example. As the parc grew at around 10% annually, during the last few years, growth will gradually reduce to around 3% eventually. Today’s car parc is relatively old; however Bulgarians will soon begin replacing older cars with newer ones, or salvage vehicles which they have rebuilt.
Bulgaria joined the EU in 2007 and since them the import of used and salvaged cars has increased dramatically. Imported vehicles skyrocketed reaching an all time high in 2007, mainly due to relatively old and very cheap used and salvage vehicles.
Fortunately, the new and salvage car market is also growing rapidly and during the past few years the market has grown at a rate of 30% annually, although we expect this rate to fall, we expect it to hold steady around 18% annually over the next years.
Toyota is the leader in the new car market and yet the most popular models appear to be the Dacia Logan and the Opel Astra. The majority of brands are recognized by a wide network of dealerships, with the majority being owned by a single local company. There is plenty of room for growing this network in the new, used, and salvage car markets.
Most new cars purchased are through financial leasing arrangements with loans playing a minor role in the new car market, but a somewhat bigger role in the used and salvage car marketplace.
Although Bulgaria has never been a manufacturer in car production, Rover has assembled vehicles using CDK kits for quite some years and a local conglomerate is currently thinking about production of a new local brand, which is understandable as Bulgaria is attempting to attract FDI in the automotive sector. Since no automobiles are manufactured in Bulgaria, there is only a handful in the automotive parts manufacturing industry as well.
The automotive market in Bulgaria for spare parts is influenced by a large number of imported used and salvaged cars, which need service that to date is not sufficiently organized to provide it. Most Bulgarians have tight budgets and are sensitive to high prices; therefore they have a tendency to choose IAM parts or fake parts, not original replacements. Fakes, used, and refurbished parts cause an issue when it comes to maintenance and repairs.
Besides the car parc, Bulgaria’s spare parts marketplace will grow to a rate of 3.5% by the year 2010, which will outperform the car parc’s growth. Spare parts and car service are still developing consumer industries in Bulgaria.
The automotive market in Bulgaria, in total, for passenger vehicles and spare parts is attractive and although the new car market will continue to grow the spare parts marketplace will be attractive as well, as it will be more professional over the next few years. The challenge will be to supply financial conditions for those Bulgarians that have low income. The aftermarket of spare parts is a main issue that needs resolved.
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