CSM Worldwide expects passenger car and light commercial vehicle sales and production in Western Europe to continue to decline well into 2010 as credit remains tight and consumers avoid replacing their vehicles until absolutely necessary.

It says sales will fall more than 7.7% in 2008 and another 12.6% in 2009, while production in the region will fall at similar rates for each year.

CSM projects that 2008 passenger car sales in Western Europe will fall by 1.1 million vehicles, or 7.4% to 13.6m, compared to 14.7m in 2007. The sales decline will accelerate in 2009 by 12.4% to 12.0m units.

“European consumers are dealing with a double whammy of tight credit and high inflation,” said Walt Madeira, CSM manager of European vehicle sales forecasts.

“Banks have stopped lending to lower-income consumers, and even those who qualify for loans find that interest rates are too high. As a result, drivers are putting off buying vehicles. Consumers will need to be lured by attractive financial terms, but those will be difficult to implement due to the ongoing financial crisis. Government incentives will be needed to jump-start vehicle demand.”

The largest declines will be in Italy, Spain and the United Kingdom:

  • Spain will continue at very depressed levels, finishing 2008 down 26.6%, then moderating somewhat in 2009 but still falling an additional 15.4%.

  • In Italy, sales will be off 13.6% this year and an additional 12.5% in 2009.

  • The UK will finish 2008 down 10% and will lose another 16.3% next year.

  • Sales for 2008 in Germany will fall slightly to 3 million vehicles, a 1% loss, but then decline sharply to 2.8 million in 2009, a drop of 10.2%, its lowest sales level since the early 1990s.

  • France is the most stable of the big markets as demand stagnates at 2.0 million in 2008, helped by the government taxation policy which benefits smaller vehicles. But the benefit will be short-term as sales will fall by 10.5% in 2009.

  • D-segment (mid-size) cars will see the sharpest overall drop as consumers continue to downsize.