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Western Europe Stabilises As The South Pulls Out Of Dive

German Sales Said Stable Overall Despite May Weakness.

“Perception of the German car market over the last three months has been nothing short of schizophrenic”

Car sales in Western Europe seem to have stabilised, despite worries that Germany was about to go into reverse.

According to LMC Automotive, sales in Western Europe fell 5.6 per cent in May after April’s expansion, but it says the selling rates have picked up from earlier in the year as most markets continue to struggle against the ongoing economic headwind.

Deutsche Bank said although May’s decline came on the heels of a boost in April “we still see a sequential stabilisation of demand trends in the region,” as it retained its forecast of an overall four per cent Western European fall in 2013, just above LMC’s minus 3.9 per cent prediction.

The pace of recovery remained fragile and slow.

“Clearly, any recovery scenario should not be seen as fast as in 09/10, when mostly emerging market demand pulled profitability to then unexpected new highs much more rapidly than anticipated. That said there appears to be bottoming in parts of Southern Europe, namely Spain and Italy,” Deutsche Bank said.

News that German new car sales had fallen nearly 10 per cent in May led to some nervousness, but the bank said there was nothing to worry about.

Mundane
“Perception of the German car market over the last three months has been nothing short of schizophrenic. March was commonly perceived as a disaster, April a strong rebound, and latest data shows May was once again dreadful. Alas the truth is much more mundane,” Deutsche Bank said in a report.

The bank said that if you adjust the data to account for holidays, sales look relatively steady, and it retained its forecast of a four per cent decline for the year for Germany too.

“It appears everyone has gotten a little carried away about Germany, in both directions, of late. The underlying trend looks much more stable,” Deutsche Bank said.

General Motors Chief Financial Officer Dan Ammann, in an interview with Morgan Stanley, agrees that the worst times seem to be over.

“(There is) no sign the European market has improved. But at the same time GM’s beginning of year assumptions of a market down five percent-ish are still valid. There’s no evidence that things got worse either,” Ammann said.

 Neil Winton – June 12, 2013

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