Issue: Oct 2010


September 2010 West European Car Sales



by J.D. Power Automotive Forecasting

Car sales in Western Europe fell by 10.4% in September. The market continues to compare poorly year-on-year to a 2009 market that was inflated by government scrappage incentives. A selling rate of 12.4 mn units/year is weak by historical standards, but at least it is an improvement on the past few months. 

Result for Germany: sales down by 17.8% — the year-to-date market was down by 27.5%. The selling rate in Germany remains below 3 mn units/year, highlighting that the German consumer remains cautious even though the economy has been performing well recently.

The French market saw an 8% drop for September. It is the only major market in the region still to have a scrapping scheme in place — though this scheme is being reduced in increments through the year.

In Spain, it was another poor month for car sales with the market down 27%, a reflection of the ending of scrappage support and a VAT rise. The Italian market is another one missing its government scrappage incentive.

The UK market was also year-on-year lower (-9%), in what is an important month because of the new registration plate.

Commentary 

Western Europe car sales were again year-on-year lower for September 2010, though these year-on-year comparisons are with a period in 2009 when the major markets were benefiting from government scrappage support. The selling rate for last month stood at 12.4 mn units/year, and while this is weak by historical standards, it does represent an improvement over the July and August selling rates. 

The German market once again suffered a double-digit year-on-year percentage drop last month, though 2009 saw an abnormally strong German market. The selling rate for September 2010 stood at 2.9 mn units/year highlighting that while the economy may be picking up, consumers remain cautious with regard to making a big purchase such as a car. 

The UK market was down 9% for September — an important month for the UK market given the registration plate change. Again the lack of a scrappage scheme that previously benefited the market was evident here. On a positive note though, the selling rate climbed to 1.9 mn units/year, the best since the end of the scrappage incentive impact. 

The selling rate in the French market was fairly robust; this market is now entering the final months of its government scrappage scheme. The Italian and Spanish car markets continue to look fragile. 

West European Car Sales 

The remaining months of 2010 will see these negative year-on-year comparisons continue, with the market set to come in around 6-7% down for the full year. As noted in last month’s commentary, we do not expect that 2011 will beat the 2010 market either. The reason is that while the underlying economic drivers for car demand should continue to pick up next year under our base case scenario, the 2011 full year market will be comparing to a 2010 market that still had incentive inflation in the first half. Uncertainty continues over the impact of the austerity measures now being adopted by European governments and ongoing sovereign debt worries; the risk of a double-dip recession certainly cannot be overlooked

For more information, please contact: Jonathon Poskitt (jonathon.poskitt@jdpa.com, +44 1865 207052)

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