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Europeans In For A Treat As Sales Growth Stumbles

Europeans In For A Treat As Sales Growth Stumbles.

For 2016 we anticipate a much more modest sales increase for both cars and commercial vehicles-Zetsche”.

Car sales projections for Europe are being slashed as worries mount about the possibility of global recession. European car buyers are in for a treat though because tightening markets mean better deals for them.

Daimler CEO Dieter Zetsche warned that European Union (EU) car sales will barely improve in 2016 after jumping more than nine per cent in 2015.

“For 2016 we anticipate a much more modest sales increase for both cars and commercial vehicles. We expect car sales to go up around two per cent, reaching roughly 14 million,” Zetsche said.

Zetsche made the remarks through the European Car Makers Association, known by its acronym in French, ACEA. Zetsche is currently president of ACEA.

Investment bank Morgan Stanley also expects sales growth to slow to around three per cent in Europe this year.

IHS Automotive reckons E.U. sales growth will slow to 2.5 per cent in 2016 and warns that although the market has made a bit of recovery, the European economy is delicately balanced.

Before mayhem struck world stock markets a couple of weeks ago following the Chinese meltdown, forecasters for Europe’s prospects were already forecasting a big slowdown in car sales. Stock market weakness isn’t always a leading indicator signalling economic recession but it often is. Stock markets have rallied a bit late this week to take some pressure off.

Speaking before stock markets slumped, Hans-Werner Kaas, senior partner and head of the McKinsey Automotive & Assembly practice in Detroit, expected sales growth to slow.

Price pressure
“In 2016 sales will grow between three and four per cent (in Western Europe). In general, I’m actually more confident and optimistic about the European market and I expect interest rates to remain stable. But the big question for me is the competitive pressure on prices,” Kaas said in an interview.

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

LMC Automotive also expects a modest improvement in 2016, with a gain of 3.0 per cent after last year’s 9.0 per cent rise to 13.2 million in Western Europe.

“We continue to forecast further solid growth this year. The economic backdrop is expected to continue to improve in 2016, which will support ongoing recovery in the Italian and Spanish markets, with scope for further improvement in France. The bigger markets, Germany and the U.K., are expected to provide less support for regional growth over coming years, as they are already around stable medium-term levels,” said LMC Automotive analyst Jonathan Poskitt.

IHS Automotive analyst Carlos Da Silva said European car sales have rallied thanks to pent-up demand after the long recession but dangers lurk.

Narrow road
“For sure the European economy is doing better and is expected to keep improving. However, it remains highly fragile. Unemployment remains stubbornly high, most of the national debt problems have not been solved, austerity measures will keep having a lasting impact on populations, socio-demographic issues – the security and migrants ones for instance – are weighing on many political agendas. This makes for a very narrow road to be travelling on,” Da Silva said.

2016 though may be a very good year for European car buyers. As manufacturers fight among themselves to offer customers lower prices and cosier deals, there’s a raft of new machines hitting the market. In the premium sector, Audi has launched the new A4, and there’s BMW’s X1 small SUV, a new Mercedes E class and Jaguar F-PACE, its first SUV. And it’s not just those with fat wallets that will be in for a treat. GM’s Opel Vauxhall is launching its new Golf fighter, the Astra, while there’s a new Renault Megane, VW Tiguan, Peugeot 3008, and Kia Sportage.

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