West European car demand will fall by almost four per cent this year to 14.3 million according to the market researcher, Marketing Systems. The forecaster also says that new passenger registrations in Germany will decline for the third year running, reaching just 3.26 million.

The findings are published in the current Marketing Systems ‘Eurocar’ study.

The Essen-based market research and consulting firm forecasts that poor economic conditions will lead to new car registrations in Western Europe falling to 14.3 million units this year after 14.84 million in 2001.

Of the major European markets, the forecaster says only the United Kingdom will increase this year, up almost 3%. This is attributed ‘on the one hand to the UK’s separation from adverse economic developments in the euro zone and on the other to demand being stimulated by significant price cuts’.

According to Marketing Systems, all other major markets will show decline this year, in some cases substantially: France minus 5.1%, Italy minus 8.6%, Spain minus 7.1%.

New registrations in Germany, the largest single market in Western Europe, will post negative growth rates for the third consecutive year according to Marketing Systems. The main reason cited by Marketing Systems is the ‘deterioration in the economy’. Contrary to all the forecasts, (the autumn 2001 appraisal of the leading economic institutes having expected economic growth of 1.3% in 2002 and an average unemployment figure of 3.86 million), economic recovery has not taken place.

Marketing Systems says: “The fact is that economic growth will most certainly amount to less than 0.5% and unemployment will rise to 4.07 million”.

These underlying conditions will result in around 3.26 million new registrations in the current year. The market researchers in Essen view the outlook for the German market in 2003 as “at best moderate”.

Marketing Systems says that economic policy-making in Germany is in disarray and adds that ‘with government policy replacing clear decisions with public discussions and no foreseeable increases in revenues, consumer confidence and consequently the inclination to spend, have plunged to almost immeasurable depths.’

However, Marketing Systems acknowledges that the mood could improve next year following interest rate reductions by the ECB.

The German car market is expected to increase slightly to 3.35 million new registrations in 2003, but the forecasters are cautious.

Marketing Systems points out that there are a number of economic and political uncertainties that could considerably reduce demand in Germany. One subject of much discussion in the German automotive industry is the planned increase in tax on company cars. Marketing Systems sees this tax increase risking turnover losses for manufacturers and component suppliers. And, they add, the industry faces a greater risk than loss of volume alone, since ‘any threat to the suppliers of advanced equipment, powerful engines and technical innovations not only endangers jobs in the entire automotive industry in the short term but also weakens Germany as an industrial location in the longer term’.

Car production by the German manufacturers is forecast to decline this year, though still amounting to 5.1 million units, according to the Marketing Systems forecasts. With car exports totalling 3.6 million, exports will account for approximately 70% of production.

The forecaster also says that an expected 50,000 unit increase in exports to countries outside Western Europe next year would lead to the volume of cars produced in Germany expanding to 5.25 million in 2003.