The declining West European car market is forecast by JD Power to register a further decline in 2011 against the backdrop of a slow European economic recovery. The bleak assessment of market prospects came as the firm published sales data for August confirming a negative sales trend.
The forecasting division of JD Power said that car sales in Western Europe fell by 14.2% in August, continuing the downward trend that has set in following the ending of scrappage incentives. The German car market was down by 27% in August and the year-to-date is 28.7% off last year’s pace.
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The latest negative result for West European car sales follows on from a depressed market in July, and continues to highlight the difficulties the industry now faces in the region with the ending of government scrappage support.
JD Power Automotive Forecasting said that it forecasts the car West European car market to continue falling over the coming months and finish the year 7% down on 2010 at 12.73m units.
It also said that it does not see the 2011 market eclipsing 2010 either, the 2010 result including an incentive-boosted first half of the year that won’t help the year-on-year comparison next year. After 2010’s 7% market decline a further decline of 1.4% is projected for 2011 – putting the West European car market at 12.56m units.
“On our current base forecast underling car demand is actually picking up next year on the basis of a slightly improving economic forecast,” JD Power analyst Jonathan Poskitt told just-auto. “But the year-on-year comparison sees a small 2011 decline against 2010 because the 2010 market did experience the final phases of scrappage uplift in the first half.”
Poskitt is cautious about the 2011 outlook and warns of the real risk of a double-dip recession that would further reduce underlying car demand in Europe.
“There are downside risks associated with fiscal tightening and high unemployment and also what that would do for consumer sentiment and spending on big ticket items likes cars,” he maintains.
“If we see major economies in Europe slipping into recession we could be looking at a car market perhaps 700,000 units lower than the current base forecast we have for next year, depending on the extent to which car manufacturers would be prepared to take a hit on their bottom lines,” he says
The JD Power data shows that the Seasonally Adjusted Annualised Rate of sales (SAAR) for last month in Western Europe stood at just 11.7m units a year. This, JD Power notes, is some distance from what was considered ‘the norm’ of the last decade (14.5m units-plus).
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Dave Leggett
