August 2006 European Car Sales

SUMMARY

• Car sales in Western Europe fell by 1.3% in August.
• Year to date, the market was up by 0.6%.
• Initial estimate for Germany: sales down by 1.1%% — the year-to-date market is up by 0.7%.
• The West European Market continues to show signs of gentle recovery but concerns remain in a number of countries. The bulk of this year’s gain is likely to result from the VAT change in Germany — early 2007 will take a hit from this pull forward.
• The August result implies a return to strong pricing pressure (incentives) in September.
• The German market remained stable and, while sales fell slightly in August, the year-to-date total remained ahead of last year. The 2007 VAT change looks set to boost sales in late 2006, ensuring a gain for the year as a whole. For Germany in the short term, the low-key August result is not a cause for concern at this point.
• Sales are down in Italy and the car market struggled to make progress in France, despite economic gains in both countries. The UK market is continuing to trend downwards. Small markets are lending strong support.