New car registrations in the EU down 10.8% on a year ago – with sales in Spain off 36.8% and Greece posting 48.5% slump
European car sales have fallen for the twelfth consecutive month and are heading for a double-digit decline this year, in the latest indication of the continent's economic struggles.
New car registrations in the European Union fell 10.8% in September compared with the same month last year, providing a darkening consumer backdrop to another day of mounting speculation that Spain is close to seeking a formal bailout. The eurozone's fourth largest economy was the second worst performer in figures published by the European Automobile Manufacturers' Association, posting a 36.8% slump in sales that was surpassed only by Greece, with a fall of 48.5%.
However, analysts said the main point of concern in the ACEA data was the confirmation of a slowdown in northern Europe, where the UK was the only bright spot with a sales increase of 8.2%. Elsewhere, even the continent's strongholds are struggling with Germany posting a decline of 10.9%, followed by a slump of more than a quarter in the Netherlands and 18% in France. Total new registrations in the EU were just under 1.1m, compared with 1.23m in the same period last year.
Neil King, automotive analyst at Euromonitor International, said weak consumer sentiment caused by the eurozone crisis appeared to be filtering into Germany. "With Germany turning negative, that is having a knock-on impact on the few resilient areas such as northern Europe and the premium brands."
Although mass-market brands bore the brunt of the declines, with Renault falling by more than 30% and Fiat tumbling by 15%, premium vehicles were also affected. According to the ACEA, Jaguar sales in the EU fell 10% year-on-year, Lexus declined by 13% and Mini fell by the same amount. Mercedes declined by 6.4% although other German premium brands fared better, with BMW rising by 10.5% and Audi managing growth of 1.4%.
The Society of Motor Manufacturers and Traders said the UK's domestic industry was still far from its pre-boom heights and will not be immune from the eurozone's troubles. Paul Everitt, SMMT chief executive, said British consumers had benefited from a weak pound and European manufacturers targeting the more vibrant UK market with aggressive pricing. But that has had a negative impact on car retailers and manufacturers in the UK, he said. "It means that margins are very thin for vehicle manufacturers and their retail networks. It is not a situation that can continue that much longer," said Everitt. "It's a great time to be buying a car because there is a lot of good quality product being offered at exceptional values, but it makes it a tough environment to be working in."
The SMMT expects UK car sales to rise by around 4% this year to just under 2m. However, the ACEA estimates that Europe could be heading for a decline in car sales of between 8% and 10% in 2012, with the upper end of that estimate representing the continent's worst car sales performance in nearly two decades. In the year to date, EU car sales fell 7.6%.
The figures come as car manufacturers grapple with a capacity glut that has saddled the likes of Fiat, Vauxhall and Peugeot with underused plants. Western European plants made just under 16m cars and vans in 2007 but this year that total is expected to be 12.5m, according to forecasts by IHS Automotive. Mark Fulthorpe, analyst at IHS Automotive, said Tuesday's numbers made it even more likely that there will be further factory closures. "All of the evidence points towards that being the most likely outcome of the situation that we have at the moment."
Fulthorpe added that manufacturers are beginning to cut back production "because the opportunity of a better tomorrow in terms of western European demand is just not evident".
GKN, the FTSE 100 company that makes driveshafts, also signalled a European slowdown on Tuesday when it warned of "more challenging European automotive and industrial markets", forcing analysts to reduce profit forecasts. The company said: "Macroeconomic conditions have deteriorated in recent weeks and some softening in order books is now evident, particularly regarding European automotive and industrial markets."
The continent-wide slowdown and car sales has triggered a wave of temporary factory closures. Last month the Vauxhall plants at Ellesmere Port and Luton stopped production for a week due to the "downturn in mainland Europe".
Vauxhall's move was replicated on the continent, with even bigger shutdowns in Italy where Fiat mothballed its Naples plant for a fortnight and Vauxhall's sister company Opel close its Russelsheim site for a total of 20 days this year. Despite the hiatus at Vauxhall, the SMMT expects the UK to produce up to 1.5m cars this year, compared with 1.34m in 2011, due to strong production numbers from premium producers including Mini and Jaguar Land Rover, as well as the Japanese manufacturers with established UK operations, Nissan, Toyota and Honda.
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