Western Europe – a Region of Diverging Recoveries
Not all Western European car markets are recovering at the same rate reported Jonathon Poskitt, Head of Sales Forecasting, Europe at J.D. Power during his company’s Global Automotive Outlook Spring Conference in London.
In Germany, consumer and business confidence is booming and German unemployment is at its lowest for nearly 20 years and is forecast to continue to fall. In 2010, the car market tumbled by 23% to 2.8 million units in the wake of a very successful car scrappage scheme which helped to lift 2009 sales to 3.8 million units. Currently, the seasonally adjusted sales rate is 3.25 million and Poskitt forecasts growth next year to 3.4 million and 3.6 million in 2016.
In the UK, the picture is rather different. Government austerity measures are squeezing disposable incomes and consumer confidence is plummeting. Average yearly car sales between 2000 and 2007 were 2.45 million but the current selling rate is 1.89 million. Poskitt forecasts a 7% drop in 2011 followed by a further decline in 2012 before sales recover to 2.3 million in 2016.
Spain is experiencing its highest unemployment rate in over a decade and the extent of it is dragging down both the economy and consumer confidence. Average yearly car sales between 2000 and 2007 were 1.54 million but the current selling rate is barely over half of that figure at 0.84 million. Poskitt expects the market to decline by 13% this year and cautions that it may not return to 2007 levels in this decade.
In France, the current selling rate is 2.58 million units a year, compared with an average 2.08 million between 2000 and 2007. France was the last Western European market to lose its scrappage scheme, something done to avoid large market swings. Poskitt expects the current sales rate to ease back but the French economy is performing better than many others and he forecasts sales of just over 2.2 million in 2016.
Italy is another market where consumer confidence is falling and the pace of economic recovery is slow. In the first quarter of this year, car sales have fallen by 24% year-on-year and the current selling rate is 1.78 million a year, well below the 2000 – 2007 rate of 2.37 million. Poskitt forecasts growth to just over 2.4 million in 2016.
Overall, he believes that car sales in Western Europe will not return to pre-crisis levels until 2016, an eight year recovery period. There are downside scenarios to do with possible economic overheating and the instability in the Middle East and North Africa.