This article originally published on July 6 contained data charts for the month of May rather than June. The correct charts have now been added. Text and numbers within the text are unchanged.
Figures released by JD Power Automotive Forecasting show that car sales in Western Europe fell by 6.4% year-on-year in June as the post-scrappage ‘hangover’ continued to sap sales.
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West European seasonally adjusted annualised sales (SAAR) fell to 12.8m units/year in June, the weakest so far in 2010 and the slowest rate of sales since March 2009, before scrappage schemes had really started to boost the market.
New cars sales in post-scrappage Germany were down by a whopping 32.2%, with the year-to-date market down by 28.7%.
Italy was also hit by post-incentive weakness with the car market there down by 19% and a selling rate of 1.8m units/year. This period of weakness is for Italy is unlikely to recede in 2010, JD Power said.
UK sales held up well, JD power said, considering that scrappage support is beginning to fall away.
Car sales also held up relatively well in France and Spain. In France, a scrappage scheme continues, albeit at a reduced level, while in Spain the funding is very soon to expire. Funding for the Spanish scheme is now assumed to have been exhausted, but the boost to sales could last through August registrations.
JD Power said that OEM discounting has been employed, liberally in some cases, in order to mitigate the impact of incentive withdrawal. This has been especially true in Germany but is taking place more generally in a number of countries. This approach to the current market environment represents ‘an upside risk to our forecast for Western Europe’, JD Power acknowledged.
But the firm also noted that the emerging consensus among Europe’s economic policymakers for a swift and sustained attack on national fiscal deficits ‘can only be bad for vehicle demand as it is likely to entail public sector job losses, or wage freezes and cuts, cancellation of government-funded private sector contracts, with tax increases coming alongside’.
Consumer confidence ‘is now on a downward trajectory once more’ JD Power said, warning that ‘we assume that the effects will be more prominent in 2011 and perhaps subsequent years, rather than in 2010’.
JD Power said that it does not expect to see the West European car market in 2011 exceed 2010’s level. The JDP forecast for 2010 is 12.86m units, some 5.7% lower than last year and some 13% below 2007’s market peak of 14.8m units.
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