Professor Ferdinand Dudenhoeffer, head of the Center Automotive Research, said Europe will come back very slowly because of the economic problems in countries such as France, Italy, Spain and Greece. He said the economic situation needs to be stabilized before the auto industry can pull out of its slump.
Fitch Ratings said on Wednesday that a recovery in new-car sales in Europe back to pre-crisis levels could take until the end of the decade, if it can be achieved at all.
"Structural factors and anecdotal evidence make it uncertain that sales will return to the 1999 peak of 15.1 million units. They suggest that European recovery will be slow at best and could follow the path of Japan, where vehicle sales have fluctuated since 1998 at 25 percent to 45 percent below their peak in 1990," Fitch said in a statement.
Fitch said cyclical factors, including weak consumer and corporate confidence, high unemployment and tighter credit conditions, are keeping buyers out of showrooms but the agency also cited a number of trends that will affect car sales:
- Owners are keeping vehicles, which are increasingly reliable and robust, for longer and are driving shorter distances
- The total cost of vehicle ownership has increased
- Several large cities or countries have taken measures to limit or deter car usage
- Surveys show a declining interest in cars from the younger generation.
Manufacturers of small vehicles suited to urban conditions and with fuel-efficient engines are best placed to outperform the market, Fitch said. These vehicles should be well positioned to take advantage of people moving to suburbs not well connected by public transport and of the overall trend toward downsized vehicles and engines.
"It will be even more important to monitor the product mix as customers increasingly decide to keep a car but opt for a smaller or cheaper model," the statement said. "This is in line with our view of how the market is polarizing toward high-end brands on the one side and entry-level marques on the other."
Eastern Europe gives hope
Fitch said the expected outperformance of central and eastern European markets as they catch up with more developed European markets in terms of car density is likely to offset persistent weakness in western Europe and offer better prospects than in Japan.
Government intervention could also support sales at higher levels than underlying and fundamental demand, given the industry's importance to employment and in light of support given in the past.
Fitch said Europe's economy and new-vehicle sales can rebound more strongly than expected. It said auto sales in the United States recovered to 14.4 million units in 2012, up 13.4 percent from 2011 and 39 percent from 2009, in contrast to previous market assumptions and forecasts pointing to long-lasting depressed conditions.
Reuters contributed to this report