Ford of Europe chief sees replacement demand driving car sales in 2014

Odell: ''There is a replacement climate, for sure.''

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DETROIT (Bloomberg) -- New-car sales in Ford Motor Co.'s 19 main European markets may rise almost 6 percent this year, driven by customers replacing aging vehicles, Stephen Odell, president of Ford's Europe, Middle East and Africa operations, said.

Industrywide deliveries in the region may jump to as many as 14.5 million in 2014 from about 13.7 million in 2013, Odell said.

Vehicles on European roads have been in use for an average seven to eight years, unusually old for that market though less than the 11-year average for U.S. cars. "There is a replacement climate, for sure," Odell said.

"There will be a point where the average age will trigger something, and that really is what's feeding our view of a modest recovery. The unknown is when the unemployment levels start to change, and that would be an accelerant," the executive said in an interview in Detroit on Monday

Automakers are expressing optimism about a slow rebound in the European car market after three consecutive monthly increases through November, the longest string of gains in four years. Prior to that streak, figures for the eight months through August were the lowest since industry association ACEA started compiling numbers in 1990.

Tax effects

Industry sales in the 19 European markets served by Ford probably finished the year at about a 16.8 million-vehicle seasonally adjusted annualized rate in December, a result that was "wildly distorted" by year-end tax changes in the Netherlands and France, Odell said.

"I suspect January will be a little down, simply because a lot of business was pulled into December, but then we'll probably see it start to pick up a little bit through '14," the executive said.

Ford's 11-month sales in that region, which also includes Germany, Spain, Poland and the Nordic and Baltic countries, fell 3 percent to 999,300 vehicles. The decline was buffered by a 0.3 percent gain in November.

European leaders are still grappling with unemployment that's lingering at a record-high 12 percent in the countries using the euro after an 18-month recession ended in June.

Economic forecasts

The euro zone's economy probably shrank 0.4 percent last year, according to estimates by the European Central Bank. Gross domestic product in the UK, which doesn't use the euro, may have expanded 1.4 percent in 2013, the country's government said in December in an upgraded forecast.

Europe's sovereign-debt crisis appears to be "managed and contained," and should be resolved over time by economic growth and inflation, Odell said.

The economy of the UK, Ford's largest market in the region, is "recovering faster than anybody thought," he said. "Wages haven't gone up a great deal, spending has gone up, house prices have gone up a lot," he said. "Are people spending what they think is the equity in their property, which is not an unusual event in the UK? We'll have to see," Odell said.

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