After a slow January, February brought a further slight weakening of the West European car market. But for another strong month in the UK it would have been worse. Italy was well down and the selling rates declined in Spain and France. Germany’s slumber continues. Total West European car sales retreated to an estimated selling rate of 14.65 mn units/year, from the previous month’s 14.7 mn. Overall sales were some 1.9% below the year-earlier level. This analysis is from JD Power-LMC.


Summary



  • February brought a further slight weakening of the European vehicle market, which would have been much more pronounced but for the continuation of the UK boom. West European car sales retreated to an estimated selling rate of 14.65 mn units/year, from the previous month’s 14.7 mn. Sales were some 1.9% below the year-earlier level.
  • A poor result in Italy contributed much to this outcome. The hangover after long periods of intensely competitive marketing seems to have begun.
  • Results in Germany were surprise-free, but both France and Spain also produced slightly weaker selling rates in February than in the previous month.
  • While sales in the larger countries disappointed, there was evidence of a slightly firmer trend in some of the smaller markets, particularly in Belgium and Scandinavia.

In a month when many of the economic indicators began to promise an improvement in European economic conditions, it is nevertheless clear that demand for new cars, outside the UK, has continued to decline. Countries that contributed strongly to the maintenance of demand last year, such as France, Italy and Spain, have lost impetus, to greater or lesser degrees, while Germany, the “sleeping giant” of the European market where sales have been below trend for two years, continues to snore peacefully. February is of course a month in which UK buyers are largely absent from the market, as they await next month’s numberplate change. The UK’s contribution to the absolute numbers in February is relatively minor. However, there is every indication that the seasonally adjusted pace of demand remains very strong.


There is very little difference between the trend in the car and light commercial vehicle markets. The 1.4% decline in West European cumulative year-to-date sales for cars is the same if all light vehicles are included, and 1.9% if sales in the countries applying to join the EU are added.


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. The most recent numbers underlying this chart are appended in the table at the end of this note.  

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The German market continued at a selling rate of between 3.2 and 3.25 mn units/year during February. This is pretty much in line with the average of the two previous months, but, as our table shows, significantly below last year’s level. Obviously, signs of improvement will be apparent in the orders data before they filter through to the sales data, but there is nothing to report on this front at present. However, a report that stocks of unsold used cars had declined from an average of 117 per dealer to just 60 is encouraging. At the time that the German market weakened, a couple of years ago, many in the industry felt that the excess supply of unsold used cars was an important factor contributing to the loss of new car sales.


Italy’s sales of just 197,200 new cars in February represented a selling rate of 2.1 mn units/year, which is the lowest seen in any month since 1997, when the recovery from the depression that began in 1993 was still not complete. Various reasons for the low result are suggested in the press releases from ANFIA and UNRAE. They include the ending of the stimulus provided by the ending of sales of leaded petrol, and the lower number of vehicles needing replacement that were first registered during the 1993-1997 period. Both organisations reckon on a sales total of about 2.2 mn units this year.







“The [Italian] data on incoming orders were also significantly lower in February. “


The data on incoming orders were also significantly lower in February. The only positive news is that the outstanding order bank remains above the year-earlier level. It is still swollen by the strong order inflow in the final months of last year.


After a strong start in January, French demand slipped back in February. Averaged over the two months, the selling rate was around 2.2 mn units/year, continuing the lower tendency that had begun at the end of last year. (We are now a little more confident about the appropriate seasonal adjusters with which to interpret the post-millesime French market). France was one of the few countries in Western Europe in which consumer confidence deteriorated further last month. It has been broadly unchanged since last September, and the disparity between low consumer confidence and strong vehicle demand is gradually diminishing. However, the launch of the Citroen C3 could provide a boost to new orders.












Expert Analysis





The Future of Block Exemption and Motor Vehicle Retailing in the UK and EU
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UK sales through dealers were 18% higher than last February. The selling rate was once again stellar, at 2.785 mn units/year. What will matter much more is the performance during March (which, incidentally, has three fewer registration days than last March). Nearly all of the growth is coming from retail buyers, rather than from fleet and business, sales, though these too are still strong. Moreover, non-dealer sales do not seem to have ebbed away, since price differentials continue to make arbitrage with Euro prices very attractive. In fact, we have revised upwards by about 18,000 units our estimate of sales in calendar 2001, to reflect the evidence that non-dealer sales were higher than we had originally thought.


The Spanish market contracted sharply in February. To some extent the comparison with the year-earlier figure is a little misleading, since the Prever plan had been altered early last year in a way that boosted sales. However, the sharply lower seasonally adjusted selling rate is giving us more reliable information about the extent of the deterioration in the underlying level of Spanish demand. ANFAC has noted that the extent of the decline in February would have been much worse, if it had not been for an 8% rise in sales to rental companies mitigating the 10% decline in other sales. Incidentally, the fact that this combination resulted in an overall reduction in sales of only 1.9% appears to imply that sales to rental companies account for well over one-third of the total, though ANFAC does not publish absolute numbers. 


Results from the smaller countries contained some positive news from Sweden and Finland, where the recent declines now seem to have bottomed out, as well as a very strong result from Belgium. However, Greece, Portugal and the Netherlands showed quite sharp falls in the selling rate.


Charles Young (cyoung@lmc.co.uk, +44-1865-791737)


Oxford, March 6th 2002.


 
























































































































































































 

 

 

Sales (units)

Feb

Feb

Percent

Year-to-date

Year-to-date

Percent

2002

2001

change

2001

2000

change
WESTERN EUROPE   1,068,083   1,089,401 -2%      2,364,149       2,399,040 -1.5%
AUSTRIA        20,264        21,569 -6.1%           45,777            47,454 -3.5%
BELGIUM        52,611        45,711 15.1%         108,483          103,060 5.3%
DENMARK          7,454          7,129 4.6%           14,497            13,355 8.6%
FINLAND          8,456          8,313 1.7%           20,590            20,864 -1.3%
FRANCE      173,121      177,412 -2.4%         365,389          368,615 -0.9%
GERMANY      239,000      236,150 1.2%         482,400          478,392 0.8%
GREECE        21,403        22,780 -6.0%           48,424            52,220 -7.3%
IRELAND        21,469        23,458 -8.5%           52,662            56,804 -7.3%
ITALY      197,200      226,455 -12.9%         445,500          500,180 -10.9%
LUXEMBOURG          4,522          4,372 3.4%             7,267              7,757 -6.3%
NETHERLANDS        41,393        41,762 -0.9%         112,253          112,160 0.1%
NORWAY          7,024          6,664 5.4%           14,410            14,542 -0.9%
PORTUGAL        19,821        19,043 4.1%           38,747            42,371 -8.6%
SPAIN      113,496      122,880 -7.6%         216,197          221,271 -2.3%
SWEDEN        18,841        17,926 5.1%           35,134            34,521 1.8%
SWITZERLAND        22,493        24,126 -6.8%           47,427            46,415 2.2%
UK        98,515        83,651 17.8%         308,991          279,059 10.7%




















Notes: Austria, Denmark, Luxembourg and Switzerland: estimates for latest month
Italy: latest month provisional estimate by Motorizzazione, previous months based on estimate of eventual revisions to Motorizzazione data.
Spain and Portugal: figures include sports utilities, which are reported separately from cars.
Netherlands, Germany estimated from data excluding final days of month.
UK: includes estimates for non-dealer sales.
The percent change in the final column compares the average selling rate in the year-to-date with the last full year.
The average of the seasonally adjusted selling rate for an entire year is by definition the total of sales in the year.

 


 












































































































































 

 

 

Selling rate (Units/year)

Feb

Year-to-date

Year

Percent

2002

2002

2001

change
WESTERN EUROPE   14,637,944   14,690,313   15,005,634 -2.5%
AUSTRIA        286,007        287,103        293,528 -2.2%
BELGIUM        519,525        502,510        488,683 2.8%
DENMARK          95,108          97,302          96,089 1.3%
FINLAND        110,203        104,901        109,441 -4.1%
FRANCE     2,171,299     2,231,567     2,255,112 -1.0%
GERMANY     3,234,856     3,257,396     3,341,718 -2.5%
GREECE        269,462        254,475        280,214 -9.2%
IRELAND        167,180        169,644        164,760 3.0%
ITALY     2,128,194     2,225,423     2,443,256 -8.9%
LUXEMBOURG          38,716          40,049          42,899 -6.6%
NETHERLANDS        494,366        486,659        530,266 -8.2%
NORWAY          93,434          90,355          91,916 -1.7%
PORTUGAL        241,637        238,159        255,230 -6.7%
SPAIN     1,432,650     1,476,907     1,503,370 -1.8%
SWEDEN        250,312        249,361        245,979 1.4%
SWITZERLAND        319,384        314,700        314,405 0.1%
UK     2,785,612     2,663,803     2,548,768 4.5%




















Notes: Austria, Denmark, Luxembourg and Switzerland: estimates for latest month
Italy: latest month provisional estimate by Motorizzazione, previous months based on estimate of eventual revisions to Motorizzazione data.
Spain and Portugal: figures include sports utilities, which are reported separately from cars.
Netherlands, Germany estimated from data excluding final days of month.
UK: includes estimates for non-dealer sales.
The percent change in the final column compares the average selling rate in the year-to-date with the last full year.
The average of the seasonally adjusted selling rate for an entire year is by definition the total of sales in the year.