Europe's new car mar­ket plum­mets to­ward 1993 lows

The Pak Banker - - Front Page -


The western Euro­pean auto mar­ket main­tained its sharp de­scent to­wards lev­els last seen nearly 20 years ago as con­sumers wor­ried about un­em­ploy­ment and euro zone aus­ter­ity shunned car deal­er­ships in Oc­to­ber.

In­dus­try data pub­lished on Fri­day showed that France in­curred its 12th straight monthly de­cline in new car reg­is­tra­tions, while de­mand in Spain con­tin­ued to plum­met.

Ger­many may have bucked the trend with an in­crease of half a per­cent, but once two ex­tra work­ing days in Oc­to­ber are stripped out of the equa­tion, its mea­gre growth trans­forms into a ma­te­rial de­cline.

Smooth­ing out cal­en­dar ef­fects by look­ing at Ger­many's mar­ket over the past two months shows a mar­ket de­clin­ing about 5.4 per cent in the pe­riod. "Cur­rently there is no early in­di­ca­tor or other hard data point­ing to an im­prove­ment in the next few months," said Ul­rich Winzen, chief fore­caster in Ger­many for auto in­dus­try con­sul­tant R.L. Polk.

He cur­rently ex­pects western Euro­pean car sales will fall clearly be­low the 12 mil­lion mark both this year and next - a level gen­er­ally not seen since 1986, with the ex­cep­tion of 1993 when there was a short, sharp drop to 11.3 mil­lion cars.

The ex­treme weak­ness is also start­ing to show up in the Ger­man car out­put, ac­cord­ing to data pub­lished by the do­mes­tic auto in­dus­try. Pro­duc­tion vol­umes dropped by 6 per cent last month to 446,100 ve­hi­cles as car­mak­ers steered away from stock­pil­ing in­ven­to­ries of un­sold ve­hi­cles.

Ger­man brand Opel, a unit of Gen­eral Mo­tors, con­tin­ued to strug­gle in its home mar­ket de­spite a new money-back guar­an­tee in place since late Septem­ber.

Sales fell 15 per cent dur­ing the first full month of the cam­paign, shav­ing Opel's mar­ket share in Ger­many to 6.1 per cent - a new low for this year. Ac­cord­ing to the Car think tank in Duis­burg, de­mand for Opels in Ger­many has never been lower than in this year. While Ger­many nev­er­the­less is hold­ing up rel­a­tively well, given its largely re­silient labour mar­ket and higher con­sumer con­fi­dence, car mar­kets in struc­turally weak south­ern Euro­pean economies continue to suf­fer heav­ily as more and more bud­get cuts, tax hikes and sup­ply­side re­forms are im­ple­mented. Septem­ber's near 22 per cent slump in Spain came af­ter the gov­ern­ment raised value-added tax, ap­pli­ca­ble from Septem­ber 1, as part of its fis­cal con­sol­i­da­tion pro­gramme.

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