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Car Sales Are Recovering, But Strength Exaggerated By Weak Comparisons

Car Sales Are Recovering, But Strength Exaggerated By Weak Comparisons.

“It will now become essential to compare figures from this year to those from 2019 to chart how the industry is recovering”

European car markets are flattering to deceive as sales improvements look good but compared with 2020 which was flattened by the shock of coronavirus shutdowns and short-term economic disaster.

Springtime in Europe traditionally meant car buyers flocking to showrooms to see the latest impressive wheels showcased with much hype and bluster at the annual Geneva Car Show. The coronavirus has put paid to car shows, for the time being at least, and the latest headlining new cars, like the all-electric Mercedes EQS, Audi Q4 e-tron and Volkswagen ID.4, will have find buyers in other ways.

Forecasters now see a solid recovery as the year progresses and coronavirus vaccinations become ubiquitous, while worries about the impact of the third wave of Covid infections and a chip shortage remain in the background. The impact of the blocking of the Suez Canal must have sent shivers of apprehension through the auto industry, but that seems to be a horrendous scenario shelved. Nervous types will be thinking that the relative ease that this crucial trade artery was blocked will not have been noticed by terrorists.   

According to forecaster LMC Automotive, the 2021 first quarter ended on a disappointing note as sales failed to gain serious momentum. LMC cut its Western European forecast for the year to growth of 11.6% to 12.04 million, compared with its previous month’s forecast of 12.3% growth. In the first quarter, Western Europe’s sales rose 1.2% to 2.8 million.

Western Europe contains all the big markets like Germany, France, Britain, Spain and Italy.

German sales rose 36% in March to 292,300, compared with the same month last year, but were down 6% in the quarter to 656,500. Germany is Europe’s biggest market.

Autovista Group Daily Brief editor Phil Curry warns that April and May sales across Europe will also be skewed because of the extreme measures a year ago.

Various negatives
“It will now become essential to compare figures from this year to those from 2019 to chart how the industry is recovering,” Curry said.

LMC Automotive sticks with its view that all be well later in the year as the recovery fights off the various negatives.

“Our outlook for 2021 has been trimmed since last month’s report by about 80,000. The news of a third wave of the virus in mainland Europe has led to many key markets extending or strengthening their restrictions, this added to by further disruption to already relatively slow vaccine progress,” LMC said in a report.

“The auto chip shortage is a further headwind currently faced by the auto market that complicates the near-term picture. However, these immediate disruptions are temporary, and we maintain our expectation of improved selling rates over H2 2021, as mass immunization should allow restrictions to be lifted and lead to a more favorable selling environment for the region’s automotive industry,” the report said.

In a separate report, LMC said a full market recovery in Europe as a whole won’t happen before 2023 as the effects of the heavy economic contraction take time to unwind.

Fitch Solutions was bullish on 2021 although it didn’t provide any detailed numbers

“The vast majority of European nations (will) be well placed to access and distribute a Covid-19 vaccine to a large extent of their population in 2021, through national procurement initiatives and/or membership of the EU, which has agreements in place with several developers to deliver over 2.5 billion vaccine doses. This informs our view that vehicle sales in Europe will recover to strong growth in 2021, as a Covid-19 vaccination program translates into a normalisation of consumption and economic activity more broadly,” Fitch Solutions said in a report. 


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