The West European car market in November showed an improvement on the very weak performance of the previous month, but there is still no mistaking the downward trend underlying the month-to-month fluctuations over the last six months. An abrupt decline in the French market during the last three months has been one of the main reasons for this. The evidence from the car market is just one of a number of signs from a wide range of economic indicators suggesting that the West European economy is slowing, after a period of more rapid growth during the first half of the year. Indicators of confidence have been slipping back, and high fuel prices have been taking their toll of household spending power.
The chart below shows total West European sales. The squares represent the total number of cars sold in a year, while the hollow dots represent the selling rate in individual months, and the continuous line represents a moving average of these. We indicate the latest two months.
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The German market remains flat. When final figures are in, sales in November are expected to be close to, or a little above, 270,000 units, which would translate to a seasonally adjusted annualised selling rate of 3.37 mn units per year. This is pretty much in line with the average over the months since the market bottomed out in March, after a steep decline over the previous six months. However, the final figure for October, reported by the Kraftfahrt Bundesamt on November 22nd at 259,474 units, came in lower than had been expected, and translated into a selling rate of less than 3.2 mn units/year. Indications from incoming orders hold out only faint hopes of an early pickup in the selling rate.
French sales, at 176,549 units in November, were 4% down on the same period of the previous year. Much more significantly, they represented a return to a selling rate that appears to be less than 2 mn units/year. It is two years since the selling rate moved above that level, peaking at 2.2 mn units/year at the start of 2000. Although the total sales in 2000 will not show a great difference on the previous year, the all-important fact is that, at the end of this year, the selling rate is trending downwards. However, we must once again bear in mind the uncertainty about how sales in January will perform, now that January is for the first time the start of the model-year as well as the calendar year. It will be at least another year before we can be confident about the new seasonal pattern of French sales.
162,572 new cars were bought from dealers in the UK during November, a figure that is no less than 13% higher than the previous year’s. Following the disappointment of a poor sales volume in the key month of September, this represents a return to a selling rate in excess of 2.4 mn units/year, after adjusting for seasonality and for sales through other channels. Buyers appear to be responding well to the price reductions of recent months, although these reductions continue to be exceeded by the falls in nearly-new prices. The UK selling rate has shown little trend as the year has progressed.
Estimated sales in Italy in November, at 183,700 units, were 7% higher than the same month of the previous year. But the selling rate has been slipping back as the year has progressed, and November’s figure translates into a seasonally adjusted annualised rate of 2.36 mn units/year, compared to an average of 2.47 for the preceding months. Here, as in France, the negative trend appears to be associated with declining consumer confidence following the hikes in Euro interest rates. Italians will be among the first to reap the benefits of the wave of tax cuts coming into effect in many West European countries in the near future, and should benefit from lower tax payments in December. However, there is little sign of this in the car sales or even the incoming order data.
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By GlobalDataThe selling rate in the smaller countries not separately discussed continues to trend downwards. A sudden deterioration in these countries made an important contribution to the decline in the overall West European market in October, when the combined selling rate for the group as a whole fell to 4.25 mn units/year. Throughout the previous months of the year, the selling rate for this group of countries had been fairly steady at 4.75 mn units/year. Not all have yet reported, but from those that have it is clear that the November result will be intermediate between these two figures, and some 2 to 3% lower than last year. Spain accounts for just under one-third of the total for this group, and there has been a clear downward trend there in the course of the year, with a particularly poor result in October. The November result was considerably better, representing a seasonally adjusted selling rate of 1.4 mn units/year, but still showed a decline of just under 10% on the previous year.
Oxford, December 8th 2000
