The latest provisional car sales figures released for Western Europe show that the market went in to decline in April. Is the market finally on the turn? If so, why?…and who are the early winners and losers in 2000? Read just-auto’s analysis to find out…

Provisional figures released by ACEA show that car sales in Western Europe were some 7% down in April 2000 against the same month of last year. But don’t be too alarmed. It is not as serious as it sounds. The number of working days this year was 2-3 days less in many countries due to when Easter and its public holidays fell. The year-on-year comparison for the month is therefore distorted. If that effect is stripped out, much of the reduction disappears. In reality, the market in April was virtually flat against last year. That means that the market is still running at a fairly high level, but also that growth is easing. This is hardly surprising after the phenomenal strength of the market over the last two years.

A number of factors have ensured that market volume has stayed at record levels – at the expense of margins for many manufacturers. On the demand-side, interest rates have been very low. The launch of the euro in 1999 coincided with worries about the global economy at the time. Those worries turned out to be exaggerated and cheap finance brought traffic into the showrooms. At the same time, very competitive conditions in the marketplace have been reinforced by abundant supply from existing makers (who are saddled with overcapacity estimated in Western Europe as a whole at 25%). New – or recent – entrants are also continuing to gain share. Last year also saw some boost to the market due to the impact of several important high-volume new model ranges and the gradual rollout of model variants – for example, the VW Golf and Opel Astra model ranges. That would have lifted sales somewhat, especially in Germany.

In the first four months of the year, car sales in Western Europe were just 1.1% ahead of the same period of last year. The outlook on interest rates now looks less favourable than it has for some time. The continued weakness of the euro versus the dollar looks certain to result in upward adjustment to European interest rates. Some of the unprecedentedly good deals and low car prices around will not be sufficient to support car sales at year-ago levels as the year progresses. Most importantly too, the replacement cycle will become increasingly adverse. As consumers have piled into the market across Europe to replace their vehicles over the last few years and take advantage of new models, cheap finance and in some cases (e.g. Italy) temporary scrappage incentive schemes, a natural consequence has been some bringing forward of purchases. That means some loss of demand from future time periods. We are entering that ‘payback’ zone now.

Most of the larger European car markets look to be heading for stabilisation or slight decline. In Italy, the impact of the new Punto will be fading, while in Germany it seems that the ‘post-unification’ replacement wave (i.e. the replacement of vehicles purchased during the boom period of 1991-1993) has now worked through. Many of those vehicles have now left the parc and been replaced. Worries over the hesitant German economy and high unemployment persist. The weak euro and the risk of inflation will worry German consumers more than most.

France and Spain continue to show positive trends. The French market is still on an upward replacement trend as it recovers from a scrappage incentive low in 1997/1998. The Spanish market is one of the few markets to see genuine growth of new demand as per capita car ownership there continues to play ‘catch-up’ with the richer countries of Europe. The market in Spain could reach 1.5 million units this year – not too far off the circa 2 million unit markets that are normal in the only slightly more populous countries of France, UK and Italy.

Table 1: Western European new car sales by country


Source: ACEA
(**) The figures for these countries are provisional

At the manufacturer level, the market is clearly led by the Volkswagen Group, boosted by especially strong sales of the Skoda brand. Octavia sales are still strong this year, but there is an additional boost too from the impact of the Fabia supermini model (built on the VW Polo AO platform). Seat too is performing well, helped by market geography certainly, but also by the impact of the Leon. For the VW Group, the VW and Audi brands are relatively weak this year. Relief for Audi comes with the renewed A4 later in 2000. Overall VW Group sales are down by 3.2% in the first four months and share dipped to 18.2%.

Market geography (i.e. major presence in the growing French market) will be a factor behind the strong sales of PSA Peugeot-Citroen. Product also plays a part, with Peugeot benefiting from strong sales of the 206 and Citroen getting a lift from the impact of its Xsara Picasso mini-MPV (Renault Scenic competitor).

For the Japanese makers, a generally weak picture is compensated for by extremely strong Toyota sales. The immensely successful Yaris supermini range is mainly responsible for Toyota’s 26% gain over last year. The car is currently being imported from Japan, but French production of the Yaris model starts at Valenciennes next year. The plan to establish a marketing bridgehead for the Yaris prior to that looks to be going well.

Fiat’s gain this year is helped by the impact of new product such as the Punto, but also renewal under the Alfa Romeo and Lancia badges.

Ford’s continuing poor performance has its roots in model cycles. Sales of the Fiesta and Mondeo are depleted, as both models are late in their cycles and due for renewal very soon. Also, Ford’s very successfully introduced niche models – such as the Ka and Puma – have now passed their initial sales surge. As Ford restructures in Europe, the decision to drop a MAV competitor to the Opel Zafira – at least on the current generation CW170 Focus platform – can only make the job of recovering share even more difficult. The Fiesta and Mondeo replacements cannot come soon enough. On the plus side though, Jaguar sales are very strong with the impact of the S-type. The X400 BMW 3-Series competitor will bring a further incremental volume boost for Ford in 2001. The Land Rover acquisition will help too.

DaimlerChrysler’s sales are up by 4.1% against 1999, with Mercedes-Benz slightly down and Smart well up. The impact of Smart’s ramp-up should fade as the year progresses, while Mercedes-Benz will get a boost with the arrival of the new C-class (W203 platform). For BMW AG, the inclusion of Rover in its figures – for the last time – provided a final and slightly ironic boost. The sharp increase in Rover sales in April in the UK due to heavy discounting was responsible. The arrival of the new Mercedes-Benz C-class will bring the BMW 3-Series range under attack this year.

The Korean makers are continuing to enjoy sales success in Europe, with sales in the first four months up by over a fifth against last year. A range of new or recently introduced products that are producing incremental sales growth is backing up their well known ‘value-driven’ marketing. Cars such as the Daewoo Matiz and Hyundai Atoz are well placed to take advantage of a growing appetite for niche vehicles such as City Cars.

Table 2: Western European passenger car sales by make

 
             
 

April

April

 

Jan-April

Jan-April

 
 

2000

1999

% Ch

2000

1999

% Ch

ALL BRANDS

1,286,088

1,382,735

-7.0

5,534,199

5,471,533

+1.1

             

VW Group

247,955

270,393

-8.3

1,005,341

1,039,088

-3.2

VOLKSWAGEN

144,520

168,526

-14.2

599,847

663,860

-9.6

AUDI

45,198

49,145

-8.0

175,039

173,413

+0.9

SEAT

39,684

36,360

+9.1

158,832

140,464

+13.1

SKODA

18,553

16,362

+13.4

71,623

61,351

+16.7

PSA Group

168,056

156,996

+7.0

708,489

641,793

+10.4

PEUGEOT

103,520

96,786

+7.0

427,124

388,642

+9.9

CITROEN

64,536

60,210

+7.2

281,365

253,151

+11.1

JAPANESE

137,253

159,235

-13.8

638,771

637,428

+0.2

TOYOTA

45,137

44,812

+0.7

201,659

159,513

+26.4

NISSAN

29,133

31,715

-8.1

143,205

147,409

-2.9

MAZDA

15,427

22,379

-31.1

74,695

88,087

-15.2

HONDA

14,636

18,360

-20.3

73,155

77,964

-6.2

MITSUBISHI

14,624

17,787

-17.8

63,709

68,591

-7.1

OTHERS

18,296

24,182

-24.3

82,348

95,864

-14.1

FIAT Group

129,502

139,509

-7.2

605,855

570,096

+6.3

FIAT

97,959

107,600

-9.0

461,255

442,103

+4.3

LANCIA

15,899

13,443

+18.3

74,834

56,242

+33.1

ALFA ROMEO

15,347

18,199

-15.7

68,311

70,804

-3.5

OTHERS

297

267

+11.2

1,455

947

+53.6

GM Group

141,040

159,885

-11.8

604,389

618,887

-2.3

OPEL/VAUXHALL

132,995

151,408

-12.2

573,530

588,025

-2.5

SAAB**

7,069

7,094

-0.4

27,278

26,630

+2.4

OTHERS

976

1,383

-29.4

3,581

4,232

-15.4

RENAULT

138,255

148,291

-6.8

587,215

592,054

-0.8

FORD Group

129,800

157,703

-17.7

572,723

622,722

-8.0

FORD

106,141

133,021

-20.2

477,960

527,110

-9.3

JAGUAR

3,093

2,943

+5.1

13,473

7,342

+83.5

VOLVO

20,566

21,739

-5.4

81,290

88,270

-7.9

DaimlerChrysler

73,527

75,038

-2.0

301,374

289,434

+4.1

Mercedes

58,500

62,240

-6.0

241,036

245,795

-1.9

Smart

8,200

3,750

+118.7

28,901

13,080

+121.0

Chrysler

6,827

9,048

-24.5

31,437

30,559

+2.9

BMW Group

78,623

69,233

+13.6

297,968

280,429

+6.3

BMW

40,980

44,907

-8.7

174,595

173,020

+0.9

ROVER

37,643

24,326

+54.7

123,373

107,409

+14.9

KOREAN

39,221

41,233

-4.9

192,873

158,842

+21.4

(*): Western Europe includes European Union, Iceland, Norway, Switzerland (includes Liechtenstein)

GM Group/Others includes IBC & GM(US)
FORD Group/Ford includes Ford(US)
FIAT Group: FIAT includes Innocenti/Others includes Ferrari & Maserati

Source: ACEA