West Europe car sales stalling as prospects turn gloomy; but VW powers on

Germany’s stellar performance made all of Europe look good in September, but its strong, 8.1 per cent car sales increase masked a stagnant performance in the other big markets. As Germany’s economy falters later this year, sales are likely to go into reverse all across Western Europe.

Car sales in September rose 1.1 per cent compared with the same period last year. Third quarter sales were up 1.4 per cent, according to figures from industry newsletter Automotive Industry Data (AID).

German based manufacturers like Volkswagen, its Audi upmarket subsidiary and BMW performed strongly, as did the Koreans, Hyundai and Kia. Toyota and Fiat of Italy were laggards.

American companies just about held their heads above water, with GM’s Opel-Vauxhall raising sales 0.8 per cent in the nine months, while Chevrolet dipped 1.3 per cent. Ford Europe’s sales fell 3.6 per cent in the nine months. Fiat sales dived 17.2 per cent and its Chrysler affiliate, including the Lancia brand, fell 10.6 per cent.

But consumer skepticism about Europe’s economic prospects is likely to lead to falling sales for all of 2011 and 2012, as political leaders dither over a bailout plan for the Euro.

Germany’s performance kept the ship afloat in the third quarter, but this is unlikely to continue into the fourth period. The OECD has predicted the country’s GDP would contract by 1.4% in the last three months of 2011. Germany accounts for about 25 per cent of Western European car sales.

“If Germany’s notably higher sales are excluded, West Europe’s overall car market declined 1.0 per cent last month and 4.2 per cent at the three-quarter point,” said AID editor Peter Schmidt.

Things don’t look good from here on in.

“Gloom about this and next year’s Europe’s car sales prospects deepened with fresh September evidence that the difficulties of the intensifying European debt crisis were spreading fast into dealer showrooms, sending forecasters back to their laptops to revise downwards earlier car sales projections for this and next year,” Schmidt said.

According to automotive forecaster J.D.Power, overall Western European sales will slip 1.4 per cent to 12.79 million this year, and dip another 1.3 per cent in 2012.

VW, along with its Audi, SEAT and Skoda brands and with a little bit of help from its luxury Bentley, Lamborghini and Bugatti subsidiaries and its control over Porsche, raised its market share by two percentage points to 22.9 per cent in the first nine months.

Meanwhile Toyota, the world’s biggest car company in terms of sales, was hemorrhaging market share, losing half a percentage point in the first nine months.

As the West European car market stutters, experts don’t think a repeat of the 2008 slump is likely, when sales dived by 8-1/2 per cent, and torpedoed the bottom lines of many European car makers.

“European automotive manufacturers look better placed to cope with a second financial crisis, with stronger balance sheets, better cash generation, lower inventory levels and better pricing than in 2007,” said Royal Bank of Scotland analyst Jose Asumendi in a report.

Neil Winton
Neil Winton writes the European Perspective column for Autos Insider. He was Reuter's Science and Technology Correspondent and European Auto Correspondent before setting up as a freelance columnist and web site publisher, writing about the European automotive industry and its products. Neil can be reached at neil.winton@btinternet.com.