October 18, 2011. Copyright 2011, Graphic News. All rights reserved

Europe car sales stalling as prospects turn gloomy
By Neil Winton

LONDON, October 18, Graphic News:  Slightly higher September new car sales in Western Europe masked a sharp deterioration in overall conditions because the biggest market, Germany, notched up a strong 8.1 percent sales gain while the rest struggled. As Germany's economy falters though, sales are likely to go into reverse all across Western Europe.

Car sales in September rose 0.7 percent in the EU compared with the same period last year. From January to September, performances were diverse across the region, leading to an overall 1.1% decline, according to ACEA, the European Automobile Manufacturers’ Association.

German based manufacturers like Volkswagen, its upmarket Audi subsidiary and BMW performed strongly, as did Korea's Hyundai and Kia, and Nissan of Japan. Toyota, France's Peugeot-Citroen and Fiat of Italy were laggards.

But consumer scepticism about Europe's economic prospects is likely to lead to falling sales for all of 2011 and 2012, as political leaders dither over a bailout plan for the Euro.

Germany's performance kept the ship afloat in the third quarter, but this is unlikely to continue into the fourth period because the OECD has predicted the country's GDP will contract by 1.4% in the last three months of 2011. Germany accounts for about 25 percent of Western European car sales.

"If Germany's notably higher sales are excluded, West Europe's overall car market declined 1.0 percent last month and 4.2 percent at the three-quarter point", said Peter Schmidt, editor of industry newsletter Automotive Industry Data (AID).

Things don't look good from here on in. "Gloom about this and next year's Europe's car sales prospects deepened with fresh September evidence that the difficulties of the intensifying European debt crisis were spreading fast into dealer showrooms, sending forecasters back to their laptops to revise downwards earlier car sales projections for this and next year", Schmidt said.

According to automotive forecaster J.D.Power, overall 2011 sales will slip 1.4 percent to 12.79 million, and dip another 1.3 percent in 2012.

VW, along with its Audi, SEAT and Skoda brands, a bit of help from its luxury Bentley, Lamborghini and Bugatti subsidiaries and its control over Porsche, raised its market share by two percentage points to 22.9 percent in the first nine months.

Meanwhile Toyota, the world's biggest car company in terms of sales, haemorrhaged market share, losing half a percentage point in the first nine months. The company was still reeling from the recent recall crisis, exacerbated by the interruption to supplies from Japan due to the earthquake and tsunami. The supply chain crisis doesn't seem to have bothered Nissan, which became the leading Japanese company in September, helped by booming sales of its Qashqai crossover vehicle.

As the West European car market stutters, experts don't think a repeat of the 2008 slump is likely, when sales dived by 8.5 percent, and torpedoed the bottom lines of many European car makers.

"European automotive manufacturers look better placed to cope with a second financial crisis, with stronger balance sheets, better cash generation, lower inventory levels and better pricing than in 2007", reported Royal Bank of Scotland analyst Jose Asumendi.
/ENDS