European Sales Slip, Although Germany, France Manage Gains

Car sales were miserable across Europe in the first quarter if you weren’t in France or Germany. The outlook for the rest of year looks mixed at best, while interruptions to complicated but crucial supply chains with Japanese suppliers after the tragic earthquake, tsunami and nuclear meltdown, may yet lead to big shortages of cars during the second quarter.

Car sales in Western Europe slid 2.5 per cent in the first quarter of 2011 to 3,508,500 compared with the same period of 2010, and the downtrend gathered momentum in March when sales dived 5.2 per cent, according to European newsletter Automotive Industry Data (AID).

But this performance masked sharply contrasting fortunes across Europe. Sales in booming Germany, Europe’s biggest market, zoomed ahead by 13.9 per cent. France did well too with sales up nearly nine per cent. But the tottering economies in Britain, Spain, Italy and many smaller markets produced big negative numbers. Britain’s sales fell nearly nine per cent, Italy’s just over 20 per cent and Spain was close to 30 per cent down in the quarter.

Some manufacturers managed to buck the trend. GM Europe’s Opel-Vauxhall subsidiary performed surprisingly well, boosted by the performance of the little Meriva mini MPV. Opel-Vauxhall raised its sales by 3.4 per cent to 258,900 in the quarter.  Market leader Volkswagen of Germany sailed on serenely with a 5.1 per cent sales gain for a share of 21.6 per cent. Other notable performers in the quarter included Nissan of Japan, up 20.4 per cent, boosted by big demand for its Qashqai crossover and new Juke. Volvo also bucked the trend with a 13 per cent sales gain, according to AID.

Leading the poor performers was Fiat of Italy with a sales melt down of 26.6 per cent. Ford of Europe was another laggard with a slump of 13.7 per cent. Renault of France saw its sales fall 8.9 per cent, while compatriots Peugeot and Citroen dropped 6.2 per cent and 5.03 per cent, according to AID, despite a strong home market.

The future looks uncertain for Western Europe with industry forecaster J.D.Power projecting a stagnant year with sales rising a barely perceptible 0.3 per cent. Investment bank J.P. Morgan is probably the most positive forecaster around with a target of at least stagnation, and possibly sales gains in the low single digits.

J.D.Power said that Germany’s strong performance was helped by the lowest unemployment in nearly 20 years and strong consumer and business confidence.

Peter Schmidt, editor of AID, said sales in 2011 will be marginally worse than last year, when they slid by five per cent.

“That’s chiefly because the healthy gains in markets like Germany, followed by France are wiped again by this year’s opposing negative forces in austerity-gripped markets like Spain, Italy, Greece and Portugal, to name but a few,” Schmidt said.

Neil Winton – April 20, 2011