Market analyst and forecaster IHS Global Insight has warned that the sharp car market downturn in Europe threatens to tip an OEM into bankruptcy in 2009.
The warning follows the publication of sales data that showed an acceleration in Europe’s car sales decline in November.
November car sales figures just released by the European carmakers’ trade association, Acea, confirm provisional estimates by JD Power published on just-auto earlier this month showing sales down by around 25% year-on-year (y/y), compared with a 15% y/y drop in October.
ACEA says that new passenger car registrations in Europe fell by 25.8% in November, declining for the seventh month in a row, mirroring the financial and economic crises.
All markets decreased except Finland, Poland and the Czech Republic. In units, European November registrations declined to 932,537 cars. Cumulatively from January to November, 13,788,256 new cars were registered in Europe, representing a 7.1% downturn.
IHS Global Insight said this was the worst monthly fall in sales since 1999.
The analytical firm said that GM Europe posted the largest decline of all in terms of OEM sales in November, with its sales slumping by 38% y/y during the month to 76,383 units.
The worst performer amongst GM’s portfolio of brands operating in Western Europe was Saab, which saw its sales fall 45% y/y across the continent, a statistic that will no doubt hasten GM’s attempts to sell off the ailing Swedish unit, it said.
Of the distressed US carmakers, Ford performed better in Europe in November, and actually managed to outperform the overall decline in the market, limiting its slump in sales to only 20% y/y to 96,053 units. This tally was helped by the launch of the new Ford Fiesta at the beginning of the month.
The best performer in an extremely difficult market environment was also Europe’s leading passenger car manufacturing group, Volkswagen. The company managed to outperform the slump in the overall market quite successfully, with sales falling 17% y/y to 213,916 units. VW actually managed to record sales volume growth in the region with the Audi brand of 0.1% y/y.
IHS Global Insight said that for all OEMs it will be a case of damage limitation in the early months of 2009 as growth currently looks out of the question in the European passenger car market.
IHS Global Insight is currently forecasting a passenger car sales decline of 8.2% y/y across the combined European passenger car market in 2009, although it said this figure could be further revised upwards in light of further accelerated sales drops over the next few months.
The dramatic drop in sales volumes across all of Europe’s major passenger car markets in November will be the focus of concern for all the major carmakers involved in the region, but especially those with a larger than average commitment to the Western European car market in comparison to other global OEMs, with PSA Peugeot-Citroën, Renault, Fiat, and arguably BMW falling into this category, it said.
There is little hope of a marked improvement in the industry until lending rates are accelerated and credit terms are eased, according to IHS Global Insight.
If further accelerated losses are recorded in December and the early months of 2009, then further consolidation, and potentially even the bankruptcy of a major European OEM, is conceivable, it warned.
It is difficult to see how the current falls will level out until the third quarter of 2009, when the market will benefit from an extremely low base of comparison, it said.
It may require this kind of stabilisation of the market decline before any kind of consumer confidence in the market can be regained, and by this stage it might be too late for some companies, IHS Global Insight warned.