Hidden in the wreckage of the Europe Union's September passenger car sales are signs that the market finally is stabilizing, although a recovery still looks difficult.
For the month, the EU's industry car sales totaled 1.2 million units, down 9.6 percent from a year earlier, according to ACEA, the European automakers association. But that's actually better than the year-to-year comparisons for July and August, when sales declined 18.6 percent and 12.9 percent respectively.
Moreover, industry sales were only slightly less than Europe's 1.3 million units sold in September 2008, when the banking crisis was just unfolding.
Since France, Italy and the UK still had scrappage incentives in place late last year, auto sales will look comparatively weak for the rest of 2010.
But sales will stabilize in 2011, predicts Colin Couchman, a London-based analyst for IHS Automotive. “For the last three months [of 2010], we'll still be in heavy negative territory,” Couchman said. “Hopefully things will improve from there.”
In 2011, the EU's car sales should total 13.11 million units, IHS predicts, almost exactly even with this year's expected sales of 13.09 million units.
Of western Europe's four largest markets, IHS expects Germany to bounce back first, in part because it eliminated its incentive in September 2009 and has weathered the worst of its post-scrappage downturn.
For the first nine months of 2010, Germany's sales plunged 28 percent to 2.2 million units. But Germany's 18 percent decline in September suggests that Europe's largest market no longer is in free fall.
IHS predicts Germany's sales will rebound next year to 3.1 million units, up from an expected 2.9 million units this year. Sales in France are still up 1 percent to 1.7 million units in the first nine months, but demand is starting to soften now that the government has reduced its scrapping incentive to 500 euros (about $690). In 2011, sales in France will hover just under 2 million units, slightly less than the 2.1 million units forecast for this year, Couchman said.
The slowest recoveries will be in the UK and Italy, which ended their incentives in March 2010 and December 2009, respectively.
Those two markets will not regain pre-crisis sales levels for the next five years, Couchman predicts.
European markets that never offered scrapping incentives – such as the Scandinavian region – are bouncing back much more quickly. “They had a big fall, but they didn't have any incentives so they're coming along quite nicely,” Couchman said.
Indeed, passenger-car sales in the first nine months soared 36 percent in both Sweden and Denmark, according to ACEA.
Volume brands struggle
As western Europe recovers from its post-scrappage hangover, mass-market automakers such as Fiat S.p.A., Ford Motor Co. and Adam Opel GmbH are suffering withdrawal symptoms.
Fiat's European sales plunged 15 percent in the first nine months, while Ford and Opel/Vauxhall are down 10 percent and 8 percent respectively.