Morgan Stanley Raises Estimates For 2009, But Slashes 2010.
Increased Sales Are For Small Cars, Premium Sales Sinking Fast.
Some optimists of the glass is half full not half empty variety claim to see the first hint of recovery in the European car business, but the unrelenting hard evidence points to continuing trauma at dealerships across Europe.
Deutsche Bank reports that some factories, which have been shut down to enable the excess of stocks to find buyers, have been reopening. But this won’t last.
“After a period of massive destocking from the fourth quarter of 2008 through 2009’s first quarter manufacturers are now slightly recovering. This is attributable to Scrappage schemes which collectively are boosting European car demand by about 1.2 million units in 2009 or by 10 per cent,” said Deutsche Bank in a report.
Peugeot has added a night shift at Sochaux, France making 308s and 3008s, recruited 2,000 workers at Poissy making 207s and 500 in Mulhouse making 206s, 308s and Citroen C4s, Deutsche Bank said. All Renault plants producing the Twingo, Clio, Modus, Logan and the new Megane are back to full production.
“However we don not expect this more favourable situation to last after Scrappage schemes expire,” Deutsche Bank said.
Europeans trading down
Morgan Stanley analyst Adam Jonas said where Europeans are buying, they are trading down.
“In Western Europe, sales of premium brands have fallen 22 per cent, dropping market share to 18.4 per cent through April from 19.9 per cent through April last year. By contrast sales of mass-market brands in Western Europe are down 14 per cent (through April),” Jonas said.
Morgan Stanley has raised its forecast for sales in Western Europe to a fall of 7 per cent for 2009, up from a fall of 14.5 per cent previously, thanks to the scrapping schemes, but it has cut its forecast for 2010 to a fall of 6.4 per cent compared with its previous forecast of a one per cent drop.
Earlier in May, the European Car Manufacturers Association, known by its French acronym ACEA, said sales in Europe will fall by 25 per cent in 2009 to about 11 million, much worse than its previous estimate of a 10 to 15 per cent fall. Sales through April in all of Europe were down 17.2 per cent to about 3.4 million.
“There won’t be a quick recovery,” said ACEA secretary general Ivan Hodac. “The European automotive industry is in the middle of the most serious crisis since World War II,” he said.
Neil Winton – May 30, 2009