It doesn’t seem to have sunk in
anywhere yet that if the current rate of expansion in the European car market continues at
the present rate, then not only will the 15 million mark be reached, it will be left in
the rear view mirror. Car sales in 1998 passed the 14 million mark for the first time,
ending the year at 14,337,824. Growth for the first 5 months of 1999 has averaged 7.4%. It
will only take growth of 2.9% for the rest of the year for the 15 million mark to be
breached. Sales in May, according to provisional results issued by Acea, showed growth of
7.1% for the month at 1,285,157 from 1,199,942. The cumulative total year to date stands
at 6,762,159 from 6,298,073.

Italy is adrift of year ago figures for the
5 months, down 2.2% at 1,139,900 from 1,166,099, but the gap was closed in May when sales
rose by 2.3% to 214,400 from 209,608. There is a lot to suggest that Italy will not be in
deficit for much longer. Soon the entire city of Torino will go to a mammoth party as Fiat
prepares to celebrate 100 years of building motor vehicles. Add to that the fact that the
all-new Punto is not very far away, and that Fiat knows that this has to be right on the
button, and the ingredients are there for a further surge in Italian new car sales over
the remainder of the year. Economic forecasts for Italy are moderately pessimistic at the
moment, and much will depend on how much party spirit Fiat can engender.

The market showing the biggest growth in
volume terms is Spain, sales rising by 104,128 (22.1%) to 575,652 from 471,524, spurred on
by changes to the income tax rates. Next comes France with a 92,040 unit gain (+12.1%) to
855,648 from 763,608 and France is enjoying much stronger consumer demand than confidence
in the industrial sector would suggest. If sales do tail off in France, it is likely to be
well into the second half of the year before we see it.

The German market remains quite vibrant for
now, sales rising by 5.0% for the 5 months to 1,675,627 from 1,595,766, but the first
signs are beginning to show of a possible downturn in confidence and consumer spending
over the second half of the year. There are concerns that inflation is about to rise, but
having said that, most current economic forecasts for Germany show some measure of

The Netherlands is on a roll and is likely
to stay there. Sales to date have jumped by 21.0% to 317,981 from 262,722 and although the
rate of growth is expected to slacken as the year progresses, it is expected to remain in
evidence for a while yet. Eire, Greece and Portugal are all showing very strong growth
with only Portugal pausing for breath. The UK is an enigma with no true justification for
the current strength of the market, but with the prospect that growth could even improve
if the Rover 75 is the success that the beleaguered Rover so desperately needs. Norway is
in definite decline, Denmark and Luxembourg have wobbled from time to time, but overall
the market is strong beyond all expectations.

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It is easier to list who isn’t doing
very well rather than who is, but it has to be said that the VW Group is looking more and
more formidable with every passing month. There were those that questioned
Volkswagen’s policy of expanding its portfolio with a broad range of brands and model
types, but it seems to be paying off in spades. Excluding the low volume brands in the
group, there were four main new model launches in 1998 and there will be five in 1999 to
keep the pressure on the main competition. Add to that a raft of facelifts and tweaks and
the German giant is beginning to look impregnable.

But the VW Group can’t afford to allow
complacency to develop anywhere in their group because there is a lot of potential threat
still to contend with. The DaimlerChrysler pairing seems to be paying off already. Ford is
in the process of bringing Volvo into the fold and Renault and Nissan are still just
exploring where they can make gains from their conjoining. The Koreans are starting to
take advantage of currency exchange rate benefits, and there are still potential marriages
or liaisons looming in the near or medium future, but VW is aware of all of this and our
experience with the different marques within the group suggests that they are all still on
their guard. Yet they are clearly very confident concerning what the future holds for

Problems still loom large for Rover, Fiat,
Ford and Lancia. BMW has convinced itself that Rover can be saved. We shall soon see when
the Rover 75 reaches the market place in numbers. If they survive this latest calamitous
situation, ‘Back From The Brink’ should not be just a book, it should be subject
to a Hollywood movie. It will certainly be the European equivalent of the rescue of
Chrysler from their dire straits.

Ford is starting to define policies for
Europe. Important job appointments are being made and model policies are being firmed up.
Ford won’t find their way back in a hurry, but no one should underestimate their
abilities and they will market their way out of their difficulties until they can
manufacture their way out. Fiat has learned a lot in recent years. The company made one
launch after another that should have offered respite, but every time the opposition moved
the goalposts. Fiat now has realists leading the programme towards revival. They stated
categorically what was needed at Alfa Romeo, demanded the same of Fiat itself and are
saying the same for Lancia. We will soon know if they have convinced the workforce.