Eurozone economic difficulties are unlikely to ease before 2015 as governments across the continent wrestle with huge national deficits and fragile consumer confidence.
Addressing delegates at today’s (15 November) second just-auto Industry Intelligence Seminar in Swindon, England, Professor Peter Cooke from the University of Buckingham highlighted the long-term problems of the European automotive industry that are closely allied to those facing householders with ever more squeezed budgets.
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Referring to yesterday’s (14 November) mass demonstrations against government-imposed austerity measures across Europe, Cooke highlighted the considerable political upheaval also involved with inevitable restructuring in the car industry.
“Many got the foretaste of political issues,” he said. “Yesterday in the Eurozone were something like a million people protesting. What concerns me if you look back at the last time we got that level of involvement in negative issues [it] was the time of the Russian revolution.
“Realistically, it will take two to three years to sort the Eurozone out. [The] Eurozone will enter outright recession in the coming months, with the major economies not recovering until 2014-2015.”
However, Cooke raised the intriguing possibility hard-pressed European OEMs could look to the UK as a market to offload unwanted stock at home. Of all the European economies, apart perhaps from Germany, it is the UK that is bucking the overall trend and posting some positive numbers, against a healthy employment environment, albeit one constrained by pay restraint.
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By GlobalData“Are OEMs looking to have an onslaught into the UK with right hand drive cars shipped here at amazing deals and discounts?” asked Cooke. “OEMs have to grasp growth. Are we going to see OEMs grasping the nettle? There is the old adage – never waste a recession.”
Despite the more benign automotive environment in the UK, Cooke added there were signs UK consumers were starting to come to terms with addressing changing consumer habits as a result of stagnating or lowering incomes, citing a drop in miles driven as just one example.
“People drove around 1,300 fewer miles in 2010 [than in] 1995,” said Cooke. “What about tax revenue coming in from fuel? We have real concern that during the next few years the Chancellor of the Exchequer [finance minister] will have difficulties finding new ways to get revenue.”
The professor also highlighted the issue of the rising age of the used car market in the UK as belts were tightened and reliability of non-new vehicles improved.
“A lot of people tend to ignore the used car market but it is absolutely critical for the economy,” said Cooke. “Are we going to come to a situation with far more used cars in the marketplace, because simply with the quality of the vehicles, people are not going to be a able to afford new cars?”
