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European Sales Growth Slowed In March; VW Brand Slips

European Sales Growth Slowed In March; VW Brand Slips.

But Underlying Trends Look Good And Analysts Raise Forecasts For 2016.

European sales growth slowed in March as the Volkswagen brand declined slightly, but the underlying trend looks healthy and analysts are ratcheting up their forecasts again.

E.U. and EFTA new-car sales rose 5.7 percent in March to 1.75 million, according to the European auto industry association ACEA. Sales for Volkswagen’s core brand fell 1.6 per cent but analysts believed this was a relatively good performance given the controversy surrounding dieselgate.

IHS Automotive analyst Carlos Da Silva raised his forecast for E.U. sales in 2016 to 3.5 per cent to 14.2 million. Last month he was forecasting two per cent growth. LMC Automotive said sales in Western Europe in 2016 will rise 6.5 per cent in 2016, after last month’s forecast of 5.3 per cent growth.

Da Silva said the fall in VW’s own brand sales was cause by the age of some of its key models and the impending launch of the second-generation Tiguan

“It could also be some hangover from the impact of the negative publicity from its diesel emissions,” he said.

Professor Christian Stadler from the Warwick Business School agreed that the impact from dieselgate was less than expected.

Not massive
“While the numbers are down, it is actually a far cry from what one would have expected. Of course, that the VW brand has been hit more than others is no surprise, but, considering the furore of ‘dieselgate’ we have definitely not witnessed the demise of the Volkswagen Group that some expected. There has been a downturn, but it is not a massive one. In fact, as past history of scandals has shown, people are often quick to move on and forget,” Stadler said.

As for the wider market, IHS Auto’s Da Silva said the demand trend remains strong with no real sign of abatement. Private buyers are coming back too.

“Interestingly and hopefully, private demand seems on the verge of coming back also in those markets that were still shy on private demand – Germany, France – which is certainly indicative of better things to come. Tactical sales – those made to rental fleets and registrations by dealers and (manufacturers) – have started to slow down which indicates less need to artificially sustain volumes,” Da Silva said.

He cautioned that the global and European economies look fragile, but he raised his forecast for E.U growth to 3.5 per cent saying gains will continue to the end of the decade.

“It will require a very bad event – or series of events – to derail the current trend, we think,” said Da Silva.

Last year car sales in Western Europe leapt nine per cent to 13.2 million.

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