In this week's Business News: Škoda defies the weak economy with record car sales; the Czech Transport Ministry says it will accept financial claims caused by the vehicle registration meltdown; summer storm damages reach half a billion crowns; Czech debt reaches 1.6 trillion despite austerity; inflation rises in June and Czech Railways selects companies for train maintenance contract.
Škoda defies weak economic outlook with record car sales
Car maker Škoda Auto sold a record 493,000 automobiles during the first half of 2012, representing a year-on-year increase in sales of 8.4%, according to data released this week. The Octavia proved to be the most successful model selling almost a quarter of a million units. Sales were up globally as well, including in Eastern Europe; the only place where a fall was evident was in Western Europe, which saw a 0.7% decline. The company is planning to sell 1.5 million cars across the globe by 2018.
Transport Ministry to accept claims for vehicle registration meltdown
The Czech Ministry of Transport has announced that drivers affected by ongoing serious malfunctions in a new computerised vehicle registration system will be able to claim for damages incurred. According to the ministry, damages caused as a result of switching to the new system will be passed on to the company ATS-Telcom, which was hired to implement the 47 million crown upgrade. The ministry has also threatened not to pay ATS-Telecom and switch back to the old system if repairs are not completed by the end of this Thursday. Different locations across the country are experiencing numerous issues with the new system including missing or incomplete data related to automobile registration.
Summer storm damages reach half a billion crowns
Damages caused by summer storms in the Czech Republic could soon reach half a billion crowns, with insurers registering thousands of claims for damages caused by flooding, lightning and hailstones during the months on June and July. According to the insurer Česká Pojišťovna, the Central Bohemian and Eastern Bohemian regions are seeing the most claims lodged, with the south and west of the country also strongly affected. The greatest damages have been caused by the effects of strong winds and hailstones on roofing as well as falling trees damaging electricity lines. According to meteorologists, severe weather occurrences are set to continue in the coming weeks.
Czech debt up despite austerity
The national debt rose by 136 billion crowns during the first half of 2012 according to new data from the Ministry of Finance. In total, the Czech Republic now owes around 1.6 trillion crowns, up almost a quarter of a trillion from the same time last year. According to the Finance Ministry, low borrowing rates enabled to Czech Republic to sell bonds at relatively low rates of interest and bolster its reserves should the eurozone crisis escalate in the future. For example, in February of this year, the country sold around 2 billion euros, or around 51 billion crowns, worth of debt bonds and also sold around 110 billion crowns worth of long and medium term bonds during the same period on the domestic market. Short term government debt remained at 19.3% of GDP according to the Finance Ministry, well below the IMF’s debt red line of 25%. Overall, the Ministry plans to borrow 243 billion crowns this year and around 12 billion less in 2013.
Inflation up in June to 3.5%
Inflation rose in June to 3.5% year-on-year from 3.2% the previous month, according to the latest numbers the Czech Statistics Office. Rises in the prices of food and tobacco products are viewed as chiefly responsible for the increase. Conversely, energy and housing price impact on inflation decreased in June, for example the annual increase of natural gas prices fell from 25.1% to 16.1%. Clothing and electronics, meanwhile, witnessed a decrease in prices, as did non-food-related household goods.
Czech Railways selects companies for train maintenance
Czech Railways have chosen the winners for a tender worth 5.3 billion crowns to repair numerous train carriages within its fleet. The winners of fourteen separate tenders will be tasked with maintenance and repair for the next four years. The greatest winners, Movo and Pars Nova, are companies that belong to the Škoda Transportation family. The former won a contract for 1.8 billion and the latter for 1.4 billion crowns. Other winning bidders include Přerov-based DPOV, CZ Loko from Česká Třebová and Legios from the town of Louny.