SNAPSHOT

The Company: Porsche BG, the official Audi and Volkswagen dealer in Bulgaria, a subsidiary of the largest trader in the two brands in Europe, Porsche Holding.
Biggest Moment at the Moment: The September 20 opening of the new Audi showroom, one of the biggest Audi showrooms in Europe. A seven million euro investment, the opening has been accompanied by an exhibition of photographs by Karl Lagerfeld of Audi’s new sports model, the R8.
The career so far: Posts at Ferona Prague, subsidiary office of Swiss company Castolin SA, Interweld Bratislava, a subsidiary office of Austrian company Interweld GmbH, Robert Bosch Prague, Porsche Slovakia, BMW Slovakia, Porsche SCG, importer of VW, Audi, Seat and Porsche for Serbia and Montenegro.

Managing director of Porsche BG, the authorised official importer of VW and Audi in Bulgaria, Bujna is from Slovakia. In the organisation worldwide, he is the only “foreigner”, given that it hardly seems natural to think of him as such, who holds the top job in a country. With his mastery of German and his working knowledge of English, along with his work ethic and his background in another Central and Eastern European (and EU member) state, Bujna seems perfectly poised to straddle the old and new Europes that may be in transition to a new, much changed, but yet somehow unified business and living environment.

For Bujna and his team, the news of the week as we sit down in his office in Business Park Sofia is that within two days, Porsche BG’s new showroom, which will be one of the largest of its kind in Europe, is to be officially opened.

“We are very proud of it, that it has a really great location, that it is very modern,” said Bujna.

Asked if, given its scale, the showroom was intended purely to serve the Bulgarian market or if there were hopes to attract customers from neighbouring countries, Bujna responded: “There is only one country these days, and that is the European Union.”

Indeed, the fact of Bulgaria having joined the EU on January 1 2007 has meant a sea change for the motor vehicle market. In the post-communist but pre-EU past, it became common practice for Bulgarians to import cars from countries such as Germany. In part, this was because local supply could not meet demand. EU accession and the economic development of Bulgaria has changed much, the first by easing imports from other EU states, the second by the opening up of access to credit. The most obvious side-effect, and few in Sofia can failed to have noticed, is that the streets have become jam-packed with cars. Another important side-effect is that car sales market has become much more competitive.

Bujna must lead his outfit in staying ahead of the competition in a tough environment. At the head of a team about 160 people, he needs to use his management approach as best he can for the company to emerge as a winner.

Asked about the lessons he has learnt in his career as a manager, he does not point to any single mentor. On the contrary.

He says that he is against people being taken as an example of behaviour of management. Given his country’s more than four decades of communism, “we were always supposed to be looking up to somebody who was supposed to be an example but in fact was not”.

“I cannot take just one personality as a guide for my behaviour or management skills. Working with such strict stereotypes is, for me, an example of such former times. You can take separate parts of behaviour of people and summarising them can be helpful in how you behave as a manager. I have taken examples from many people that I have met in my career.”

It is put to him that car sales may be a reliable reflection of the development of the economy, especially given that the domestic market is sustaining an enterprise such as the one that he heads, effectively geared for the upper end of Bulgaria’s income scale.

“Car sales are always developing in each and every market. The development of the car segment and the sales in the sector is a parallel of the economic development of the country itself. For the past three years, the development has been very fast, a reflection of the economic growth of Bulgaria.”

Bujna says that the penetration of foreign investments is a major contributor to the country’s economic development, and also serves as confirmation of a view that Bulgaria is a no-risk country for investors.

“Compared to other foreigners who are in this country, I have the advantage of being a Slovak, so I am not very surprised about certain characteristics and tendencies in the development of the country. It is much like Slovakia.”

In other words, he says, what other foreigners experience as unpleasant surprises, he is able to handle with aplomb given his experience in his own country. “In a way, they are something expected, not something unexpected, to me.”

Asked to flesh out how he sees the influence of EU membership as a factor for change in the country in the past eight months, Bujna says that he noticed a difference in Bulgarian people did not react to accession with the same enthusiasm that he had seen in his country. “They didn’t show it the way that we did in Slovakia.”

A great advantage has been the fact that the introduction of EU-standard legislation, regulations and financial accounting practices has improved the business environment in Bulgaria.

As to EU accession’s impact on the car market, he says that in a way, matters have become worse for official importers.

“The obstacles that were faced by imports from Europe are no longer there. In fact, people who brought cars from abroad nowadays are able to do so much easier.”

Which leads to the question of how to keep the competitive edge; and for that matter, who are the people who come to Porsche BG to buy new-model cars?

Bujna says that the foreign investors who are coming to Bulgaria are the key target for his company. “They prefer us as a partner to the parallel importers. They (the clients) would not go a car market and buy there, even if it is better in terms of price.”

Key accounts have signed contracts and prefer to buy from the official importer.

“The profile of our customer is the profile of the established international and Bulgarian company in this country.”

Individuals who buy from the company tend to be employees of such companies, with long-term employment contracts, with the financial means to make a purchase, and the facility to access credit or leasing. The cars are bought as personal, individual possessions, rather than as company vehicles.

“Compared to those parallel importers, we have made a long-term commitment to Bulgaria, so that people can rely on our presence in the market, and on a warranty and that all the terms connected with the contract will be kept. The main point is our presence in the long term as a reliable partner.”

As the official importer into Bulgaria, Porsche BG has a direct link to headquarters in Germany, so has up-to-date information on all aspects of the product that they are selling.

Asked about the potential of the market in which his company is operating, Bujna says that Porsche operates in 17 countries, and he cannot think of an example apart from Hungary, which has particular economic circumstances, of a country where demand is falling.

Supply and demand is, of course, a key question in a market such as Bulgaria, especially in the case of a company operating in a specialist area amid a changing economic environment. Retail in Bulgaria is generally becoming more competitive (and, in many areas, well-resourced foreign-linked operations are well placed to elbow out sluggish local counterparts by offering more, better and faster) and for customers, a key question is not only, “how much is it?” but also “how long will I have to wait for delivery?”

Bujna responds: “We have in Bulgaria now, at this very moment, 300 Volkswagen passenger cars, 100 light commercial vehicles, and 100 Audis. For delivery, you need only wait five days. If you order includes some special configurations, you will have to wait about two to three months. Of course, it is a premier like the Audi Q7, you know that worldwide demand is higher than production, but that is true for every market worldwide. And an Audi R8 we cannot, of course, deliver in two months.”

However, there is another factor influencing the market, and it is one beyond the car sales person’s control. Bureaucracy, especially when it comes to a foreigner attempting to register a car in Bulgaria.

“I do think that this is a problem, even given that I am a Slovak and familiar with bureaucracy. Especially the verification when you sell a car through a notary is a procedure that I cannot find a reason for. Especially in cases that you buy a car through an official importer - I cannot find the reason for all the obstacles and bureaucracy.”

Asked whether his company had raised the issue with the authorities, Bujna says that the corporate culture of Porsche is to accept the business environment in which it must operate and not to challenge state authorities. “We are used to work in different conditions. This is a specific condition in Bulgaria. Maybe in another country there is a specific condition that is an obstacle for foreign companies operating there. It will take time, but I do believe that things will change. In this case, the person suffering is the client. We as an importer are not suffering such difficulties.”

Market Profile

Union of Importers of Automobiles in Bulgaria figures say that from January to August 2007, a total of 33 726 new motor vehicles were sold in the country, an increase of about 25 per cent year-on-year.

Dealers sold 31 920 passenger cars, a 24 per cent increase.

Toyota importer TM Auto remained at the top of the car sales market, followed by Ford dealer Moto Pfohe, with Sofia France Auto, selling Peugeot, in third place.

Compact city cars and middle-class cars accounted for most new car sales with Dacia Logan as the top-selling model in the country with 1698 units.

Market shares, on the basis of eight-month sales figures in 2007: Toyota 11.67 per cent, Ford 9.74 per cent, Peugeot 8.54 per cent, Opel 7.99 per cent, Volkswagen 7.74 per cent, Citroen 6.45 per cent, Skoda 6.29 per cent, Dacia 6.18 per cent, Renault 6.18 per cent, Chevrolet 5.49 per cent.

According to a September 13 report in Banker daily, some distributors forecast that the annual 2007 growth will additionally increase due to the traditionally strong sales in December.

According to summarised data for 2006, Bulgaria was fourth in Europe in terms of new car sales growth (42 625 deals, up 27.5 per cent from the previous year).

“In absolute size, however, the Bulgarian market remains the most modest on the continent,” Banker reported.

However, the market in second-hand vehicles has been developing at doubled speed in this country. After the fixed VAT on imported cars was lifted as of January 1 2007, the inflow of trucks carrying cars to Bulgaria has doubled and prices dropped by 15 to 20 per cent on average. According to Transport Ministry data, about 24 per cent of the cars on domestic roads are aged 16 to 20, and almost 39 per cent are more than 20 years old and cause environmental problems. As a whole the average age of cars in Bulgaria is more than 19 years.

In August, the Economist Intelligence Unit said that in Bulgaria, total vehicle ownership had more than doubled over the past 13 years, rising from 233 per 1000 population in 1994 to an estimated 396 per 1000 in 2006.

“New car registrations rose by 27.5 per cent year-on-year in 2006 and continued to grow rapidly in the first months of 2007, rising by 26 per cent year on year in January-June. This growth rate is expected to ease gradually in the forecast period, with year-on-year growth remaining in double digits in 2007-08 but slowing to average around seven per cent per year in 2009-11. Over the forecast period as a whole, the annual average rate of growth is forecast to be 10.8 per cent, compared with just 3.7 per cent for world car sales.”

This rapid pace of growth can be partly explained by the fact that the average age of most vehicles in Bulgaria is high, so that there will be a high level of replacement demand as much of the existing vehicle stock reaches the end of its useful life. Higher living standards, the upgrading of the transport network and the construction of new roads are also likely to encourage car sales in general, but there is also likely to be a further shift away from imports of used cars to purchases of new cars.