Figures just released by the European carmakers’ association ACEA confirm those issued earlier in the month by JD Power suggesting that the European car market was essentially flat in October.
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While new passenger car registrations in Europe during October were 5.5% ahead of last year, according to ACEA, that increase is due to an extra working day in the month this year.
ACEA put the total European market (EU +EFTA) at just over 1.3m units in October – 5.5% ahead of October last year. For the first ten months of the year, car sales reached 13.6m units – 1.2% up on the same period of last year.
The German market continued to show a negative trend in October (-4.1%), despite the extra day, but there were gains in France (+9.1%), Italy (+8.5%) and the UK (+8.4%).
Forecasting analysts at JD Power estimate that the West European car market will turn out at 14.7m units this year, virtually unchanged on last year. JD Power forecasts a market drop of 1.4% to around 14.5m units in 2008.
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By GlobalDataJD Power analyst Pete Kelly said that there were concerns about the impact of the cooling of the housing markets in the UK and Spain.
“There is a downside risk for car markets from falling property valuations in both of these countries,” he told just-auto.
“In Spain there has been a ‘wealth effect’ from rising property valuations and in the UK there has been a wealth effect combined with substantial mortgage equity withdrawal to fund car purchases. If house prices fall next year at the bottom end of current expectations, that presents a major downside risk to car market forecasts.”
However, Kelly also said that there are some upside risks to next year’s West European car sales forecast.
“In France, we’ve just had the Grenelle incentive announced. We’re looking into what the effects of that on purchasing behaviour will be, but past experience suggests that such incentives can boost the new car market in France by as much as 5%.”
But Kelly cautioned that there are still major uncertainties for Europe surrounding the wider impact of the credit crunch on the economy.
“There is still the issue of how the real-world is impacted by the ongoing credit crunch,” he said.
“One mechanism through which the real economy will be impacted is real interest rates, which are currently high. There is still considerable uncertainty on how the credit crunch is going to play out and what the net effects on the real economy will be.”
Dave Leggett
See also: UK: West European car sales sluggish
