Four years after it entered the domestic market, Czech used car dealer AAA Auto is considering exiting the market. The company achieved only one third of the 7,000-unit sales targeted for 2007.
"In autumn we'll reconsider our presence in Romania, after the six-month results are presented in August. If figures show operations are profitable, we'll expand further," stated Milan Smutny, spokesman of AAA Auto.
The domestic branch of the Czech group last year sold 2,641 cars through its Bucharest dealership, down from over 3,100 cars in 2006 and below the 7,000-unit target the company's representatives announced in the year ahead of Romania's EU integration.
Sales dropped further this year, after the firm reported the sale of 484 units in the first three months of the year, down from 644 units in the same period of 2007. In comparison, the domestic sales of used cars surged by 170% in the first five months and reached 68,856 units, while the market of new cars advanced by just 3.6% and reached 135,000 units.
Out of the expansion plan the Czech group had announced in early 2006, just one location was established - the one in Bucharest, despite the firm's officials having stated three years ago that they had a 45m-euro budget to support nationwide expansion.
In 2006, AAA Auto posted 24.2m-euro turnover and net income worth 340,000 euros, according to Finance Ministry data. The company's officials did not disclose the 2007 figures for Romania, but at a group level AAA Auto reported losses worth 4.9m euros and 470m-euro turnover.
In late 2007, Anthony Denny, the Australian investor who set up AAA Auto in 1992, told ZF a further four retail platforms would be opened this year, besides the one of Bucharest, with around 25-30 sales points to be launched over five years. However, expansion has been frozen for the time being.
"For 2008, restructuring and consolidation come first, and therefore we'll work with the 48 branches we have in Europe. In Romania, too, we'll have to boost productivity and we'll not open any further branches, although another two or three more would help us a lot," Smutny said.
He added the company's economic manager, Kamil Ziegler, announced Poland came first on the list of AAA Auto's exits, because it has much lower potential than Romania.
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