The automobile industry continued to contribute positively to the economic performance of the EU27 European Union countries in the first quarter of 2007, according to the Belgium-based European Automobile Manufacturers Association (Acea), which represents the interests of 14 European car, truck and bus manufacturers at EU level (once Toyota is included next January).

ACEA’s spring economic report published this week said vehicle production expanded by 4%, total new registrations increased slightly (+0.3%) and provisional employment figures showed a 1% improvement, thanks mainly to enhanced automotive investment in the new EU member states.

First quarter 2007 production of motor vehicles in the enlarged Europe was 5.1m vehicles). Passenger cars accounted for 87% of production, also increasing 4% year on year. The first three months of the year were also better for vans and trucks (+2% and +13%, respectively), while bus output declined 11%.

Of the 4.9m vehicles registered in the enlarged Europe between January and March 2007, 86% were passenger cars. Soaring new EU member countries’ car registrations (+14.9%) contrasted with western Europe’s slowdown (-1%).

In particular, the overall European result was affected by a decline in German new registrations (–10% over three-month period) triggered by anticipated purchases ahead of the January 2007 sales tax increase. France (–1.4%) and Spain (–0.7%) also saw their markets downsize.

In contrast, the UK (+2.9%) and Italy (+4.3%) remained on an upward path, the latter mainly thanks to the government scrapping incentives introduced at the end of 2006.

The share taken by diesel-powered cars in Western Europe kept rising and reached 52.4% at the end of March 2007.

The European market for new light commercial vehicles and heavy trucks showed respectively, a 5% and 5.9% rise in Q1 2007 while bus and coach registrations declined 5.3%.

ACEA said that European automobile demand in 2007 is likely to remain at virtually the same level as last year.

The Italian market might well retain its strength thanks to scrapping incentives, France is expected to mildly recover while Spain and the UK will likely slow below the trend.

Meanwhile, Germany will see the consequences of the VAT hike but new car sales there should revive in the rest of 2007 and in 2008 thanks to the introduction of new models and expected tax incentives prior to the implementation of Euro5 emission standards by 2009.

Considering the overall economic situation, European markets slightly enhanced their performance in the first quarter of 2007, ACEA said.

Gross domestic product in both the euro zone and the EU27 showed an increase of 0.6% over the previous quarter although it was slightly lower (+3.1% and +3.2%, respectively) compared to the +3.3% and +3.5% growth in the first quarter of 2006.

For 2007 as a whole, European Commission forecasts euro-area GDP to grow by 2.6% and the EU27 by 2.9%.

Looking at the main partners of the EU, predictions for US and Japan are somehow lower (+2.2% and +2.3%, respectively). In 2008, although prospects are for a slight deceleration in activity, the 2.7% growth in the EU and 2.5% in the euro area would still be above the 2003-2005 average level of 1.8% and 1.4%, respectively, ACEA noted.

The ACEA members are BMW Group, DAF Trucks, DaimlerChrysler, Fiat, Ford of Europe, General Motors Europe, MAN Nutzfahrzeuge, Porsche, PSA Peugeot Citroën, Renault, Scania, Volkswagen and Volvo plus – soon – Toyota.