Slumping car sales underline fragility of eurozone economy

Slumping car sales across the EU in August have underlined the fragility of the eurozone economy, with the cumulative figures for the year to date at a record low.

The UK remained the only major European market to record more new passenger car registrations in 2013 than last year, with 10.9% more sales this August than last.

Across the EU, sales dropped to 653,872 vehicles in August – traditionally a slow month but a figure that still remains 5% lower than in 2012. For 2013 so far, the total stands at just 7,841,596 – the lowest figure since the European Automobile Manufacturers' Association (ACEA) started compiling them in 1990.

After a slight rise in July, the trend continued downwards outside the UK, with what is set to be a sixth straight year of falling sales. Sales slid further in France, Italy and Germany. In Cyprus sales this year are down 40%. ACEA said: "The downturn prevailed across significant markets."

The PSA Group, manufacturer of Peugeot and Citroën cars, continued to lose ground to rivals, with an 18% drop in registrations, while market leader Volkswagen Group's sales fell 11% in August. VW-brand vehicles alone were down 17.3% year on year – a statistic the German manufacturer partly attributed to freak weather that damaged thousands of vehicles ahead of delivery.

Despite the downward trend, analysts believe the picture could soon improve for car manufacturers. Mark Fulthorpe, an automotive analyst at IHS, said: "The general sense we get is that we are now bumping along the bottom. At least in the car market, the rate of decline has slowed.

"There have been some positive developments in France and Germany in recent months, but not enough to offset problems in the periphery – but we may get a more neutral picture ahead."

He pointed to the experience of Britain and the US to argue that car sales in Europe could pick up before a full economic recovery. "The age of vehicles on the road is increasing, and servicing costs and repair costs for older vehicles will give many drivers reason for a newer car when consumer confidence returns at all.

"That has been the impetus for the turnaround we've seen in the American market, where many purchases were deferred in the darkest days of the crisis."

He added: "It's only in last few weeks that commentators in the UK have really thought that the economy has turned, but you can see from the last year's figures that people were already making those big-ticket purchases here."

The UK has now seen 18 months of consecutive rises, with the market for new cars in August up to 65,937 units. Although September's figures will be more significant, the summer continued the trend of double-digit rises.

The Society of Motor Manufacturers and Traders ascribed the growth to increasingly confident consumers being offered attractive terms, including a surge in sales of alternative fuel cars. Mike Hawes, SMMT's chief executive said: "Buyers are clearly capitalising on attractive deals and new technologies against a backdrop of increasing economic confidence."

Powered by article was written by Gwyn Topham, transport correspondent, for The Guardian on Tuesday 17th September 2013 19.49 Europe/London © Guardian News and Media Limited 2010


image: © Bogdan Suditu

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