Car production in Europe will continue to decline for much of this year, an analyst at JD Power has told just-auto. 

Car production in Europe declined by 39% in January over last year to 1.027m units according to data released by JD Power Automotive Forecasting.

JD Power analyst Arthur Maher said that January’s decline reflects an adjustment by manufacturers to reduced demand in Europe as well as lower exports to markets around the world – notably the US – and a continuing need to reduce stocks.

Maher maintains that we have now reached a point where the industry’s downturn is impacting all vehicle manufacturers and all European production centres.

“What has become clear is that now no-one is immune,” according to Maher.

“There was significant destocking by manufacturers in the fourth quarter of last year, but then there was a realisation when we got to January that further reductions to production were needed due to a rapidly deteriorating market outlook,” Maher said.

“And we have seen a number of announcements and reactions from manufacturers in line with that. Even BMW, with its highly successful Mini marque, has had to make an adjustment to production.”

He also believes that the downward adjustment to vehicle production in Europe has much further to run.

“We estimate that excess vehicle stocks in Europe currently stand at around half a million units. Further production cuts are forecast. We think that European light vehicle build will be 35%-40% down on last year in this quarter, though the trend will be improving as excess stocks decline.

“Our latest forecast sees a Q2 reduction of 30% followed by a Q3 decline of 20%. By the time we get to the fourth quarter we expect to see stabilisation with production turning out slightly up on last year’s Q4.”

And Maher foresees that the final quarter’s modest improvement will continue into 2010.

“We are forecasting total European light vehicle build at 16.8m this year versus 21m in 2008. Our current forecast for 2010 is for 17.7m units, so it’s a gradual improvement from the final quarter of this year. By that time excess stocks should be gone and there won’t be the need for the sort of response that we saw in the final quarter of 2008 – and which is still going on.”

Dave Leggett