The West European car market edged up again in December and posted 4.7% growth for the year, the first year of growth since the financial crisis of 2009. However, the market remains well below pre-crisis levels and concerns persist over the weak outlook for new car demand in the region in 2015.
December’s market growth was the 16th consecutive month of growth in Western Europe and the 2014 calendar year market was up 4.7% to 12.1m units, according to data released by LMC Automotive. The 2014 result still leaves the market 2.7m units below the 2007 result, highlighting the scale of the decline in new car sales in the region since the start of the financial crisis.
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The latest economic data released this week by Eurostat shows that annual consumer price inflation in the eurozone area turned negative (-0.2%) in December, raising fears of a Japan-style economic stagnation for the region.
LMC forecasts that the West European car market’s rate of growth will dip from 4.7% last year to 2.5% in 2015. LMC analyst Jonathon Poskitt told just-auto that the car market would be adversely impacted if price deflation took hold this year. “The evidence is that a sustained decline in prices leads to a general decline in economic activity. If GDP contracts, then household incomes will fall, confidence will be dented further and car markets will inevitably fall. The fragile recovery that we have seen thus far in Europe would effectively be undone. Deflation is certainly a risk to the outlook if it really takes hold. We will have to see if it becomes a factor.”
However, while price deflation poses a significant risk to the forecast, Poskitt said there were also some positives at work that could support growth in the European economy and car market this year. “Interest rates look set to stay very low and the ECB is now seriously looking at quantitative easing to stimulate the European economy. Yes, falling prices – due to the collapse in the price of oil – pose a risk. But those same falling prices are also putting extra spending money in pockets. If conditions are right and people do spend, that could provide a substantial boost. Also, the low level of the euro is good news for exporters in global markets.”
The picture in major markets was rather mixed in December, though for the full-year all Big Five national markets in the region improved on their 2013 totals (though, in the case of France, it was a close call).
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By GlobalDataIn Germany, car sales were up by 6.7% in December – the full-year market was up by 2.9%. Registrations in Germany finished the year at 3.04m units, though the selling rate deteriorated a little in recent months, LMC said. Jonathon Poskitt said that although the German car market has been disappointing lately, economic fundamentals ought to be sufficient to see it edge up slightly in 2015.
It was a rather lacklustre finish to the year in France (with registrations falling in the final month) and Italy (its selling rate slipping back last month) – both markets were up for 2014, though only by a fraction in France.
Better news came from Spain – the market was up over a fifth on 2013, with the selling rate above 900,000 units a year for the third consecutive month in December, promising a good start to 2015.
The UK car market grew by an impressive 9.3% in 2014 to 2.48m units, the market’s best annual result since 2004. The UK market was comfortably the largest contributor to the region’s overall volume improvement in 2014 and has been targeted for sales by European OEMs faced with depleted markets elsewhere in Europe. The last few months have seen the selling rate continue to climb, indicating a strong start to 2015 too. LMC said that “while we do not forecast growth to continue at the same pace this year, OEMs could well continue to look to the UK as a source of relief from tougher market conditions elsewhere in Europe.”
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West European Car Sales
| Sales ( units) | Selling rate (units/year) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Dec 2014 | Dec 2013 | Percent change | Year-to-d ate 2014 |
Year-to-date 2013 |
Percent change | 12/2/2014 | Year-to-date 2014 |
Year 2013 | Percent change | |
| WESTERN EUROPE | 913,8 47 | 88 2,077 | 3.6% | 12095121 | 11,54 7,702 | 4.7% | 1 2,476,998 | 12,095, 121 | 11547702 | 4.7% |
| AUSTRIA | 18,8 63 | 20831 | -9.4% | 304790 | 31 9,035 | -4.5% | 309722 | 304, 790 | 319035 | -4.5% |
| BELGIUM | 26,9 90 | 25081 | 7.6% | 482939 | 48 6,065 | -0.6% | 525085 | 482, 939 | 486065 | -0.6% |
| DENMARK | 15,4 20 | 14257 | 8.2% | 189044 | 18 2,198 | 3.8% | 179461 | 189, 044 | 182198 | 3.8% |
| FINLAND | 7,0 91 | 5927 | 19.6% | 106218 | 10 3,454 | 2.7% | 155309 | 106, 218 | 103454 | 2.7% |
| FRANCE | 163,3 82 | 17 5,319 | -6.8% | 1795913 | 1,79 0,457 | 0.3% | 1752586 | 1,795, 913 | 1790457 | 0.3% |
| GERMANY | 229,7 00 | 21 5,320 | 6.7% | 3036791 | 2,95 2,431 | 2.9% | 2950746 | 3,036, 791 | 2952431 | 2.9% |
| GREEC E | 3,5 66 | 4248 | -16.0% | 68401 | 58696 | 16.5% | 73587 | 68, 401 | 58696 | 16.5% |
| IRELAN D | 3 50 | 212 | 65.1% | 96337 | 74366 | 29.5% | 106140 | 96, 337 | 74366 | 29.5% |
| ITALY | 91,5 18 | 89415 | 2.4% | 1359615 | 1,30 4,649 | 4.2% | 1321179 | 1,359, 615 | 1304649 | 4.2% |
| LU XEMBOURG | 2,5 62 | 2555 | 0.3% | 48719 | 46624 | 4.5% | 51334 | 48, 719 | 46624 | 4.5% |
| NETHER LANDS | 36,4 24 | 38918 | -6.4% | 387835 | 41 6,674 | -6.9% | 610266 | 387, 835 | 416674 | -6.9% |
| NO RWAY | 12,6 49 | 11395 | 11% | 144202 | 14 2,151 | 1.4% | 146817 | 144, 202 | 142151 | 1.4% |
| PO RTUGAL | 11,9 05 | 8634 | 37.9% | 142828 | 10 5,940 | 34.8% | 127147 | 142, 828 | 105940 | 34.8% |
| SPAIN | 73,4 40 | 60513 | 21.4% | 855308 | 72 2,693 | 18.4% | 925463 | 855, 308 | 722693 | 18.4% |
| SWEDEN | 27,0 62 | 26423 | 2.4% | 303866 | 26 9,647 | 12.7% | 282829 | 303, 866 | 269647 | 12.7% |
| SWITZERLAND | 26,7 27 | 30111 | -11.2% | 295880 | 30 7,885 | -3.9% | 302481 | 295, 880 | 307885 | -3.9% |
| UK | 166,1 98 | 15 2,918 | 8.7% | 2476435 | 2,26 4,737 | 9.3% | 2656846 | 2,476, 435 | 2264737 | 9.3% |
| Notes: | Austria, Greece, Luxembourg an d Switzerland : estimates for latest month The percent change in the final column compares the average selling rate in the year-to-date with the last full year. |
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