Sales drive for the Škoda Roomster.

Several European governments have introduced subsidies for buying new cars in return for consumers scrapping their old ones. Slovakia joined Germany, France, the UK and Spain - with positive results almost immediately.

In Slovakia, the subsidy programme began last March. Sales of new cars have grown 17.11% in April and 17.4% in May 2009. June has brought an even higher rise, to 28%.

The favoured models included Škoda, Peugeot, Kia Motors and Renault. Some dealers say that the "new cars for clunkers" policy will see both secondary and after-market components, spares and parts sales begin to pick up in the second half of the year. This would be particularly so if Eastern Europe's revival matches "green shoots" in other markets.

Kia Motors outperforming the market.

Eastern Europe's export-reliant economies need a Western European recovery to revive their manufacturing sectors and spur job growth. After Germany and France exited their recessions last quarter, prospects have brightened for a resurgence of demand that might help the region's emerging economies expand.

Big drive for car sales in Slovakia

Slovakia has supported the sale of more than 40,000 new cars during two waves of scrapping "clunkers". Buyers were able to obtain a maximum discount of Euros2,000 while combining a state subsidy and a rebate from dealers.

The only requirement was the necessity to scrap the old car which had a negative influence on the environment and produced high carbon emissions.

"Thanks to the scrapping subsidy programme car manufacturers have been able to remain stable," said Antonin Sipek, Director of the Slovak Automotive Industry Federation.

The programme has also helped raise value-added tax (VAT) revenues in Slovakia.

Czech Republic goes a different route

Registrations up in Czech Republic.

Faster progress on sales.

Car sales registrations have risen in the Czech Republic, even though the country didn't introduce a scrapping incentive scheme.

The measure was vetoed by the country's President, Václav Klaus, because the scheme, he said, "favours industry at the expense of other sectors of the economy and gives preference to short term interests of several big players in the car industry".

Czech car sales rose due to the new measure of deducting VAT from the price of personal passenger vehicles. From January to the end of May 2009, 62,944 were sold, 5.5% more than in the same months of 2008.

May brought a rise of 20.5% in sales compared to the same month last year, with 14,277 cars sold.

The Czech Republic and Slovakia are currently in the vanguard of Eastern European countries in which auto parts and accessories sectors are expected to rise significantly as 2009 progresses.

from Zuzana Piper, Prague Consultant