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March 25, 2010

UK: European car market revival forecast for 2011

The European new car market will have to wait until 2011 to see a revival, according to UK-based research firm Datamonitor.

The European new car market will have to wait until 2011 to see a revival, according to UK-based research firm Datamonitor.  Datamonitor says it expects new car sales across Europe to decline by about 7% this year, on the back of a steep fall in the larger Western European markets where scrappage schemes are coming to an end. From 2011, a revival is forecast with new car sales growing in almost all European markets. Car sales in Europe are predicted to grow at a rate of 5% annually over the period 2011-15.

Datamonitor questioned the long-term benefits of scrappage schemes.  Anuj Chandna, automotive analyst at Datamonitor, said: “In most cases, scrappage schemes simply served to bring customer demand forward. However, our research shows that a permanent gap of 2-3% has also been created. “Without the scrappage schemes, we estimate that 300,000 car sales would never have happened. These buyers might have bought used cars, or simply not bought a car at all.”            Largely due to scrappage schemes, Western Europe witnessed a spike of more than 15% in the sales of small cars, the firm says. As a result, the market share of small car-focused brands increased, while the share of luxury brands saw a decline.

Furthermore, there was a sharp decline in the share of diesel cars due to the segment shift towards small cars.

In Western Europe, Datamonitor says the share of diesel cars went down to 46% in 2009 from 53% in 2007.

However, Datamonitor expects the changes induced by the scrappage schemes to be temporary. As the schemes come to an end this year, the share of diesel cars and luxury brands is expected to increase at the expense of smaller models.

 

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