Blog: Dave LeggettDoes Frankfurt 2015 mark a high water mark?

Dave Leggett | 16 September 2015

Europe's biggest motor show has not disappointed in 2015. Frankfurt had the cars, of course (I'll take the electric Porsche, please), some unusual drama with BMW (we wish Harald Kreuger well with his rest), a little James Bond glitz from Jaguar Land Rover and our team on the ground have also managed to have some insightful conversations with leading figures in the industry.

The background to the show this year is pretty positive. The German OEMs are reporting record sales and very good profits. Europe's market recovery might be slow, but it's getting there. The German car market will exceed 3m units this year. Yes, it's a very competitive market in Europe, but that's just become a kind of 'new normal' for everyone to accept. Thankfully, interest rates and the price of a barrel of oil have stayed down. And if Europe has been a tough market, other parts of the world have more than made up for that – notably North America and China.

There is though, a feeling that we might be hitting something of a high water mark, especially for the premium makers. In particular, there are growing signs of an economic squeeze in China. Even if the slowdown is temporary, it's hard to see conditions in the Chinese car market for the next three years being quite as good as they have been, given the rapid build-up of local production capacity. The ability for OEMs to push sales onto reluctant dealers seems to have finally dried up. We're entering a new adjustment phase for China's automotive demand and supply that likely means generally lower profits coming from China.

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