Provisional car sales figures for Europe
that have just been released by Acea suggest that sales in September rose by a robust
22.2% to 1,344,012 from 1,100,175, taking the YTD gain to 6.2% at 11,817,684 from
11,126,156. Sales prior to September, collectively, had been totally distorted by the
change in registrations procedures in the UK, but that should now have evened itself out.

There is a lot happening in Europe at the
moment and not all of its is necessarily good for the automotive industry. Of the eighteen
countries now included in the ACEA figures (Iceland is a recent inclusion) all but four
are showing growth, and most of it is quite vigorous. Some of the growth is
understandable, but not all of it.

Spain has rocketed the highest, sales being
190,629 units up on last year at 1,055,439 from 864,810. That is purely and simply the
result of a cut in income taxes from the beginning of the year and that is serving to spur
the market to levels never before witnessed in Spain. The WAIT forecast is for a full-year
total of 1.46 million, whereas the 1.2 million of 1998 was the previous all-time best. To
put it another way, the 1.06 million that have already been sold in Spain YTD is more than
has been sold in any full year with the exception of 1998 and 1989. Spanish data can be
very confusing, because there are several different data records that can be used for the
assessments, and they all come from the same source. Generally we tend to use the same
classification as ACEA, which means that the Balearics are included in the totals, and so
are sports/utility 4x4s. We will always continue to make those inclusions because we have
found that other sources that exclude them also fail to put them anywhere else, and thus
the overall figure is understated.

France is next in the growth league, sales
jumping by 168,730 to 1,589,522 from 1,420,792. That was despite the fact that September
sales in France fell by 9.0% to 157,440 from 173,070. However, September 1998 had been a
particularly high total for the month, in fact the second highest on record, and the
157,440 of this year is more than above average. Also the two previous months had been
particularly high with both July and August setting new best-ever results for the month
and there is some evidence that sales had been drawn forward by a few weeks. The September
result does not alter our full-year forecast of 2.23 million, which would make 1999 the
third highest total in French car sales history.

Germany continues to make steady gains,
sales rising by 126,680 units YTD, up 4.5% on last year at 2,947,571 from 2,820,891. We
expect the growth rate to ease over the closing months, finishing the year at 3.85
million, which would be growth of 3.1% for the full-year. That would also be the third
highest total on record for Germany.

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Greece is showing staggering growth of
41.4%, equal to 58,660 units. There have been years in Greece where the full-year total
has been less than the number of extra cars sold YTD. The market has already hit 200,477
from 141,817, which means a new record has been set even if no more cars whatsoever are
sold over the closing quarter of the year. We actually expect the full-year total to reach
250,000, eclipsing the previous best of 199,004 set back in 1992. The Greek market has
been spurred by a large reduction in registration taxes that have helped to push the
market towards the levels where it might have been expected to reach several years ago,
but never received the encouragement.

Eire has seen cars sales rise by 19.9%
(26,535 units) to 159,952 from 133,417. So Eire is another country where a new annual
record has been set, even though there are still three months to go. There is a similar
attitude developing in Eire as to that in parts of the USA. Unemployment has dropped to
its lowest level for a very long time, and the young in particular feel invincible. From
well over a million people without work only a year or so ago, the number is now not many
more than 100,000. But the story doesn’t stop there. Walk down any high street in the
Republic of Ireland today, and the shop fronts will scream the message ‘Help
wanted.’ A lot of the new jobs that have been created in Eire of late are high tech,
or connected with telephone sales or communications, and the jobs market has been sucked
dry of all but the unemployable, or those that simply do not want to work. And so the
feeling of job security has never been stronger, and the willingness to express new wealth
in tangible possessions is burgeoning.

However, even in Eire, all is not what it
seems. There is very good reason to think that the current boom will continue, and even
more reason to suggest that the figures are much higher than they really are. On a recent
trip to Eire we were able to see the effects of the current boom, but we were also able to
talk to some knowledgeably people about what is going on. We were told that maybe as many
as 50% of all the Mercedes-Benz models and 30% of the BMW models being sold in the
Republic are being immediately driven north of the border, with half of those being
shipped to the mainland. In both cases it means that the same vehicle is being registered
in two different countries, and that the spectre of double counting is raising its head
yet again.

It also means that the UK figures are much
worse than a casual glance would assume. The UK has seen sales dip by 23,384 units YTD, at
1,820.096 from 1,843,480. We have been forecasting a full-year deficit of 47,400 at 2.2
million for all of this year and have at times been castigated for being defeatist and for
understating the true demand. So why have we just stumbled over a stockpile of thousands
and thousands of brand-new cars that weren’t there a few months ago, and that bear
the labels of Ford, Vauxhall and Volkswagen amongst others? The practise of
pre-registrations is probably more rife now than at any time, despite all the
protestations to the contrary.

The VW Group can do no wrong right now. If
one member of the group drops the ball, another picks it up and continues the run. The
group has seen sales rise by a higher than average 13.2% YTD at 2,222,690 from 1,963,680.
Volkswagen themselves paused for a breather in September, so Audi, SEAT and Škoda all
boosted sales for the month by a third or more.

Fiat is starting to pull round, and will do
so with swift acceleration now that the Punto is becoming more readily available, but
Lancia is still proving to be a drag for the group and the new kappa, due next year,
can’t come a moment too soon.

The GM Group showed a bit more promise in
September than they have of late, but although Opel convincingly outsold Volkswagen in
September, they still occupy second place after 9 months trading and as some 15,000 of the
September gain occurred in the UK, that is not a situation that is likely to be repeated
during the remainder of the year. The GM Group overall has slipped to fifth and seems
likely to stay there for the rest of the year at least.