July 15, 2011. Copyright 2011, Graphic News. All rights reserved

Europe's car sales slump in June, but future looks good
By Neil Winton

LONDON, July 15, Graphic News:  Western Europe's new car sales dived 8.2 percent in June, dragging the performance for the first half of the year down to a negative 2.1 percent, but experts pointed out that the latest month was distorted because showrooms were closed for holidays, and predicted that sales are unlikely to fall further and may actually start accelerating again from 2012.

Market leader Volkswagen of Germany raised its share of sales to 22.4 percent, up 1.7 percentage points from the same time last year, according to newsletter Automotive Industry Data (AID). Japanese companies like Toyota, Honda and Mazda fell back, as supply lines were distorted by the earthquake, tsunami and power supply problems back home. Nissan, though, managed to buck the trend.

AID said that for the half year, Western Europe's sales totalled 6.98 million, down 2.1 percent compared with the same period last year. The biggest market, Germany, was in robust health, showing a more than 10 percent gain for the half year. But other important markets like Italy, the UK and particularly Spain racked up big negative numbers.

But this could be the end of the bad news, and the start of a long rally in car sales.

Automotive consultancy J.D.Power believes sales will steadily improve this year to show a small 0.2 percent gain in 2011 for a total of around 12.99 million, and reach close to 15 million by 2015. Sales dived by almost three million between 2008 and 2009 as the worst recession in 60 years decimated sales, and then spurted by almost two million between 2009 and 2010 spurred by government cash for clunkers schemes. J.D.Power predicts that European Union GDP growth will hit 2.1 percent in 2011 and two percent in 2012, with consumer spending growth mirroring this exactly.

Volkswagen's strong performance was boosted by sales of its little Polo city car and the big Passat. But ominously for VW, its best-selling Golf small family car is coming under pressure, according to AID's Peter Schmidt, because this latest iteration has been on the market for three years now, and is facing new competitors like Ford's Focus. The new Focus entered the market in the spring and helped Ford hold its sales slide to a better than average 1.4 percent in June, according to Schmidt.

Japan's Toyota performed poorly, as June sales slumped 27.2 percent, dragging its West European market share under four percent. Honda and Mazda were also down markedly, all handicapped by a component and vehicle supply problem following the natural disasters in Japan. Nissan managed to shrug clear of problems, helped by the huge success of its British-built Qashqai family car, and the little Micra, built in India.

While most of the mass car manufacturers struggled, the German premium sector racked up impressive sales, led by Audi and BMW.
/ENDS