ZAGREB (Reuters) -- About a half of Croatian car dealers may close down in 2010 as a slump in demand caused by recession continues, a survey released last week showed.
In the survey, conducted by the business weekly Lider, the dealers representing the most prominent global car producers said they expected a further fall in sales unless the state stepped in to help their businesses.
"More than 5,000 people could lose their jobs in our business this year. The biggest problem is high taxation that severely dampens our sales, which are already seriously hit by recession," the dealers said in the survey.
Croatia has no car industry of its own, while some smaller firms produce parts for foreign car manufacturers.
Car sales in the European Union candidate were halved in 2009 to only 44,891 vehicles. In January, the volume fell 17 percent month-on-month and 37.5 percent year-on-year, despite a number of discount campaigns.
The grim conditions forced organisers to cancel the traditional and very popular Zagreb auto show this year, as many of the regular car exhibitors declined to take part, saying they could not afford the costs.
Croatia's retail sales fell 15.3 percent in 2009 over the previous year.
Its economy contracted some 6 percent in 2009 and the government expects a mild recovery this year, but most analysts foresee another, albeit milder, recession year.
Unemployment has risen to 16.7 percent, the highest level since early 2007.
The government has this month introduced measures to help businesses by boosting liquidity, which should create room for borrowing at lower interest rates, but analysts warn that a bigger problem would be to boost local demand, given the high tax bite, stagnating income and fragile public finances.