Porsche Romania, the biggest automobile importer on the domestic market, last year made more than 48 million euros in profit, an increase of 65% on the previous year, after having doubled the number of cars sold.
"The increase in profit was achieved through volume, as operating margins went down pressured by the market. The profit increases can be done in two ways in the industry - either by boosting the business volume or by boosting efficiency, and last but not least, by optimising costs," Brent Valmar, Porsche Romania general manager, told ZIARUL FINANCIAR.
The turnover of the company overshot the 565 million-euro mark in 2005, an increase of more than 73% on the previous year due to the boom of the imported car market.
Early in the year, company officials had estimated an approximately 380 million-euro turnover and an increase in the number of cars sold from 10% to 15%, in line with the market forecasts. Imported cars, however, witnessed a growth in sales by 75% last year, with nearly every importer exceeding their sales targets set early in 2005.
"The main reason for Porsche Romania''s growth resides with the overall growth of the market. Any potential new car buyer in Romania comes to us before they make the final decisions, most often comparing purchase alternatives," Valmar said.
The extra revenues generated by the flat tax and the appreciation of the domestic currency made cars more affordable and boosted demand for such products.
Seizing upon a favourable moment, the automotive importers carried out promotions throughout the year and put more money into advertising, which drove the pace of growth of the car sales up.
Another growth factor was, Valmar says, the service capacities. "We prepared and optimised all the necessary logistics along the way, for the supply with spare parts and accessories (the maximum delivery time per part is 3 days, service rate stands at 97%)," Valmar said. The service business is usually more profitable than the actual car sales business. The development of the post-sale market, which includes car service, will be the main catalyst behind the growth in profits in the coming years, as margins on new car sales are anticipated to dwindle, players in the industry say.
At the end of last year, car sales ended a period of steady growth that led to a tripling in sales over the past five years. Now that the 210,000 new car sales threshold (one car per every 100 people in Romania) was reached last year, Romania is coming close or even exceeding the level in other countries in the region.
According to current statistics, Hungary sees one new car sold per every 54 people, while Czech Republic sees one new car sold for every 78 people, with the ratio standing at one to every 153 people in Poland
However, forecasts by players on the automotive market are also predicting growth in sales this year, at least on the imported car segment, though the pace will be much slower than last year.
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