Figures released by JD Power Automotive Forecasting show that the new car market in Western Europe declined by 2.9% in May. However, the forecaster says that the result is more positive considering that in a number of countries May this year had one less fewer working days.
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JD Power also points out that while the German market was down 10.9%, year-on-year in May, the lower number of working days and a particularly strong May last year are mitigating factors.
The German market is down by 9.6% cumulatively this year as a result of the ‘payback effect’ that followed a sales surge ahead of a VAT rise in January.
Adjusting for the number of selling days, the May 2007 result for Germany was 7% down against a strong May 2006. Even with the market picking up after the disruption owing to the VAT change, the weakness early in the year ensures it will be lower overall for 2007, with 2008 set to see some uptick.
In Italy, the car market continued the strong form that has been apparent for much of the year so far. The May result – up 5.6% on last year – was further evidence of the positive impact that the scrapping incentive introduced late last year is having in bolstering the market in 2007. A strong full year increase is guaranteed, but the pull-forward in sales this year will lead to a weaker 2008, JD Power cautions.
In France, new car registrations came in at a healthy rate of 2.19mn units/year, the best result so far this year. Consumer confidence was up in May, probably helped by the recent election of President Nicolas Sarkozy, and improving economic factors are set to support full year growth for the market.
Following a strong April (+4.3%), the UK car market eased back in May (-2.2%) with retail private sales down by -3%. JD Power notes that higher interest rates and a possible cyclical peak in house prices lead them to expect a consumer-driven downturn in UK car sales. JD Power forecasts the UK market to finish at 2.35mn units this year, essentially flat on 2006.
JD Power is forecasting that the Western European car market will reach 14.96m units in 2007 (14.77m units in 2006). In 2006, the market is forecast to fall back to 14.81m units.
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