January 14, 2009. Copyright 2010, Graphic News. All rights reserved

Europe's car sales better than expected in 2010, but stagnation looms for 2011
By Neil Winton

LONDON, January 14, Graphic News:  Europe's car manufacturers performed much better than expected in 2010, recording a sales fall of under five percent, but this year sales are likely to stagnate at best.

A year ago most forecasters expected sales in Western Europe to dive by more than 10 percent, as expensive "cash for clunkers" schemes ran out of money. These government schemes, aimed mainly at small cars and led by Germany, Europe's biggest market, were followed by all the big European nations. This subsidy helped to prop up sales in 2009 as car buyers stayed away from dealerships because of the worst economic recession in 60 years.

But car sales were not as flimsy as expected in 2010 because the German market, which accounts for almost 25 percent of Western Europe's sales, recovered some of its poise during the year. At the beginning of 2010 the industry was expecting a near one million sales shortfall in Germany. But during the second half of the year the market's underlying rate of decline progressively slowed. German car sales slipped by just over 890,000 in 2010 from the incentive-inspired high of 3.8m units the year before. For the year, German sales did drop more than 20 percent, but during the second half began to rally a bit and in December improved by nearly seven percent, according to Automotive Industry Data.

Volkswagen of Germany, with its VW, Audi, Skoda and SEAT brands, retained its market leadership with just over 20 percent, although its sales fell almost five percent over the year, AID said.

Peugeot of France, which also owns Citroen, retained its second place, but with its market share cut to just over 13 percent from close to 14 percent the previous year.

Fiat of Italy, with its ageing product range, was under heavy pressure as its sales dived by almost 20 percent. Fiat is hoping that its alliance with American company Chrysler, with its range of SUVs and multi purpose vehicles, will help to boost sales in 2011.

Toyota did almost as badly. Sales were hit by product recalls and the controversy in the U.S. about unintended acceleration.

Prestige carmakers seemed immune from the problems facing mass manufacturers. Audi fared best with a sector-leading 4.7 percent overall market share, followed by BMW and Mercedes with a respective 4.6 and 4.5 percent, AID said.

Market forecasters like J.D.Power spent much of 2010 quietly scaling back their forecasts for a decline, but at the same time raising negative pronouncements for 2011. J.D.Power now expects Western European car sales to fall 2.0 percent in 2011.

This gloom and doom in Europe is in sharp contrast with the booming car market in America, where sales are expected to accelerate over the next couple of years, led by formerly bankrupt companies like GM and Chrysler, and Ford, which managed to avoid going bust or having to seek help from the U.S. government.
/ENDS