Data released by JD Power Automotive Forecasting shows that car sales in Western Europe fell by 8.8% in June.
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The forecaster said that the June result underscores signals of deteriorating demand in a number of European countries. JD Power has cut its expectations for the remainder of 2008 and for 2009.
The West European car market is forecast at 14.21m units in 2008, a decline of 4% on last year. The market is forecast to contract further to 14.02m units in 2009.
JD Power added that a further risk to volumes may be emerging in the form of rising vehicle prices, though it is unclear at this time whether OEMs will be at liberty to pass on rising costs of raw materials.
The forecaster said that the West European market is slowing as a result of the ‘toxic mixture’ of falling asset prices, slowing global and European economic growth, financial crisis and rising inflation.
Consumer confidence continued to decline in June across the region.
JD Power said that in terms of national car markets, some countries have fared better than others but it is clear that some large markets such as Spain, Italy and the UK will significantly detract from the broader total, while others may struggle to keep level with 2007, providing little room for positive offsetting performances.
The recent increase in eurozone interest rates provides a further headwind to the region’s car markets, JD Power said.
The German market posted a result consistent with the recent past but one that hints that recovery is now on hold, after some months of steady improvement. The outlook remains stable in Germany, albeit with only slow growth expected this year.
The Spanish market dropped by a worrying 31% in June while consumer confidence also hit a more-than 20-year low. JD Power said a new incentive may have caused some buyer hold-off (even if the incentive appears unlikely to do much to
prevent the market from falling), and car and car component supply was also interrupted for a short while by the national transport strike.
The Spanish market now looks likely to fall by up to 20% in 2008 and the decline should continue into 2009, JD Power said.
The situation in Italy is little better than in Spain, though the scale of the market collapse in June is somewhat smaller. A double-digit decline in car sales looks likely this year with recovery some way after 2009.
The UK market came in lower in June on a seasonally adjusted basis, reflecting the more difficult economic backdrop. JD Power continues to forecast a drop in UK sales of 3-4% this year.
