Italy's slump will drag down European sales

Luca Ciferri is Automotive News Europe's chief correspondentLuca Ciferri is Automotive News Europe's chief correspondent
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Italy has become Europe's weakest major car market and the country is set to drag down sales across the region as a whole in 2011.

Car sales in France fell 23.5 percent in March and by 21.7 percent in the first quarter. Italy declined by 26.7 percent last month and by 20.9 percent in the quarter.

But the pain in France will lessen from this month.

France's first-quarter numbers suffered from comparison with a first quarter last year that was inflated by scrapping incentives. Morgan Stanley estimates that the annualized selling rate was 1.97 million last month, while in April 2011 it was 1.93 million.

In Italy, an auto transport truckers strike, combined with a slow economy, hit March sales and the outlook for the rest of the year is far from rosy.

Rising fuel prices, bigger insurance premiums and higher highway tolls are reducing the use of private cars and causing people to switch to buses and trains to get around. So far this year, the number of passengers using public transport rose about 30 percent in big cities such as Milan, Rome and Turin.

Unemployment is also hitting spending power. In March, Italy's unemployment grew by 1.2 points to 9.3 percent, the highest level since January 2004.

Full-year sales predictions based on March's ugly results forecast historically low volume. UNRAE, the association of foreign automakers, estimated the March annualized rate at 1.37 million, a level last seen in Italy in 1979.

Fiat-Chrysler CEO Sergio Marchionne has a more optimistic forecast that I prefer for 1.5 million sales, which implies Italy this year will fall by a further 15 percent. Last year, Italy's market fell 10.8 percent to 1.75 million, dropping for the fourth year in a row.

With a likelihood of 250,000 fewer sales, Italy's horrible year will dampen new-car volume in the European Union by almost 2 percent this year no matter happens in the other 26 EU markets. The biggest European economy, Germany, where sales were up a 3.4 percent in March and 1.3 percent in the first quarter, will not offset the slump.

That's not very comforting news in a crisis-hit Europe.

You can reach Luca Ciferri at

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