The Slovenian auto production sector looks set for strong recovery in 2015, following five consecutive years of decline. H114 figures also showed a decline, of 9.8% to 48,826 units, according to figures from the International Organization of Motor Vehicle Manufacturers (OICA). Passenger cars (48,778 units) accounted for virtually all Slovenian production over the January-June 2014 period. Given the poor start to the year, this means that we are still targeting a slight decline (of 1.8%) for 2014.
However, over H214, the outlook for domestic auto production has improved significantly. In November, we revised up our 2015 production growth forecast from 8%, to 28%. This followed the news that Slovenia's main automotive producer, Revoz, was starting a third shift at its Novo Mesto plant, starting December 2014.
Revoz - which is wholly owned by French manufacturer Renault - announced the added shift in the wake of the launch of the new Renault Twingo and Smart ForFour models. Both models are made by the company at Novo Mesto using a common vehicle platform jointly developed by Renault and Daimler AG, which owns the Smart brand.
Since Revoz remains the sole mass autos producer in the country, the added shift has prompted us to revise up our 2015 production forecast from 8% growth to 28%. We are doing so based on the company's aims of increasing production by up to one-third to produce 800 cars per day, compared to the current capacity of 600. The company is also planning on hiring an additional 450 people to complement its existing workforce of 2,400 ( see Renault company profile for more information).
Beyond 2015, we are targeting further growth, of 26.5%, which should take total Slovenian auto production to around 147,000 units by 2018. However, this remains substantially below the 2009 peak of 212,749 units and BMI does not see production returning to this high level at any time over our forecast period to 2018. Downside and upside risks to our current forecast for Slovenia's passenger car output over the five- year forecast period are significant, owing to the sector's dependence on the sales success of the Renault Twingo and the Smart ForFour models.
Virtually all of Slovenia's vehicle output comes from the Revoz car plant. Slovenia is also home to TAM-Durabus, a manufacturer of buses and commercial vehicles, based in Maribor, where bus production was relaunched in 2013.
In November 2014, TAM-DuraBus officially launched its new Vivair airport bus. The company aims to become the market leader in the airport bus segment and capture 40% of the market in a year and a half, according to director general Holger Postl. The automaker planned to manufacture 85 airport buses in 2014, while it intends to increase production up to 120 in 2015. This will include 50 tourist buses, twice the number that will be manufactured in 2014. TAM-DuraBus also plans to release more new models next year following the long-awaited government approval of a EUR3.4mn (USD4.2mn) incentive for the production of electric buses.
Turning to new vehicle sales, 2014 was another positive year. Figures from Slovenia's Association of Automobile Manufacturers and Authorised Importers show a total of 56,404 vehicles sold over the first 11 months of the year, representing annual growth of 3.5%. For the full year, BMI is targeting growth of 3.4%, to take total new vehicle sales to 61,585 units.
Looking forward, we are targeting a slight easing in new vehicle sales growth, to 2.3%, over 2015. This reflects our view that private consumption - a key indicator of potential demand for new vehicles - will remain constrained by falling house prices and still-high unemployment.
Overall, our core scenario is for the Slovenian economy is to grow steadily over the forecast period to 2018. Should economic growth prove stronger than we expect, then there could be upside risks to our current view of annual growth in the order of 2% in new car sales over the 2015-18 period. That said, we do not currently expect Slovenian new vehicle sales to return to their 2008 peak at any time over the coming period.
During 2014, German carmaker Volkswagen (VW) has now surpassed French rival Renault as the best-selling brand in Slovenia. Over the first 11 months of the year, VW sold 8,013 passenger cars, for a leading market share of 16%. Renault has now fallen to second position, on 7,282 units (14.5% share), followed by VW's Skoda subsidiary on 4,635 (9.3% share) Indeed, if VW adds its own market share to those of its subsidiaries ( Audi, Porsche, SEAT and Skoda), then the combined Volkswagen group accounts for just over 30% of all Slovenian new car sales year-to-date.
In fourth place is Opel, which sold 3,584 units, for a market share of 7.2%, followed by Peugeot in fifth place on 3,123 units (6.3%). All of the three major French carmakers selling on the Slovenian market (Renault, Peugeot and Citroen) saw annual sales decline over 11M13.
Within the CV segment, we are expecting heavy commercial vehicle (HCV) sales to outperform light commercial vehicles (LCVs) over the coming period, as the country starts to increase its investment in infrastructure and other construction projects, following a period of economic recession. That said, LCV sales will continue to account for the majority (around 80%) of commercial vehicle (CV) sales within Slovenia over the forecast period to 2018, with demand for smaller CVs set to rise as the domestic economy continues to recover.