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Stagnation Is The Best Hope For Europe In 2011

At Least Germany Will Emerge From Its Sharp Slump

While analysts differ about the relative strength of the U.S. recovery, in Europe the debate centres on just how bad will things be.

Dieter Zetsche, Daimler CEO set the tone with some gloomy remarks.

“The European automobile industry is recovering from the financial and economic crisis, but the macro economic circumstances in Europe remain very challenging,” said Zetsche, in comments made after his re-election as president of the European Automotive Manufacturers Association, known by its French acronym ACEA.

J.D.Power, in its monthly report on Western European car sales, raised its forecast for next year’s decline to minus 2.2 per cent from the previous month’s forecast of down 2.1 per cent for 2011, while cutting its projection of 2010’s fall to down 5.6 per cent from down 6.1 per cent previously.

Deutsche Bank said Western Europe’s car sales will fall six per cent this year and slip another one per cent in 2011. Sales in the full European market of 28 countries plus light commercial vehicles will reach 15.2 million, unchanged from 2010.

There was some good news.

The German car manufacturers association, VDA, said Europe’s biggest market will improve car sales by 6.9 per cent in 2011, rising to 3.1 million. Germany has suffered more than other markets, as its generous cash-for-clunkers subsidy programme started earlier and finished earlier than its European counterparts. By November this year, sales in Germany were down 25.2 per cent, according to J.D.Power.

“This could well be the last negative year-on-year comparison as the market, by the end of last year, was suffering a post-incentive slump in registrations. The strength of the German economy should help put its sales on a firmer footing in 2011,” said J.D.Power analyst Jonathon Poskitt.

Neil Winton – December 15, 2010

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