The West European car market was 0.9% lower in January over the same month last year, with France, Italy and Spain the major reasons for the negative result, according to data released by JD Power Automotive Forecasting.
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January’s overall decline was in spite of an increase of 10.6% in Germany. JD Power said that the German gain was partly explained by a weak start to January 2007 caused by a VAT change last year. However, the German market Seasonally Adjusted Annualised Rate of sales (SAAR) also points to a strengthening of the German car market, JD Power said.
The German market was hit last year by consumers holding off on new car purchases as they waited (and continue to wait) for details on a forthcoming new annual circulation tax. A government announcement on the new circulation tax is expected by the middle of the year.
Following a strong close to 2007 and increasingly volatile consumer confidence, the UK market has started 2008 on a weak note with January sales down 2% on the previous year. JD Power is forecasting the UK market to finish 2008 at below 2.3m units.
The French market opened 2008 weaker than it did in 2007, the latest result following a strong December. However, the expectation of solid consumer spending growth in France leads JD Power to predict a modest rise of 1-2% in French sales this year.
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By GlobalDataIn Italy the year is off to a slow start. While a modified version of the scrapping incentive that helped boost the market so well last year is now in place, its impact will be reduced and the Italian economy is slowing. The Italian car market is forecast to turn out lower than 2007’s ‘inflated’ level.
In Spain, the market finished strongly last year but has started this year lower as a result — a new car acquisition tax helps explain the distortion. JD Power expects that the ending of the Prever scrapping incentive, coupled with slowing key economic variables, will mean a weaker Spanish market for 2008.
JD Power forecasts that the overall West European car market will decline by 0.7% to 14.7m units in 2008.
JD Power Automotive Forecasting analyst Jonathan Poskitt told just-auto that the forecast overall slight decline to the European car market reflects a balanced view and that there were both positive and negative factors driving the big national markets, with some markets growing and some forecast to contract this year.
“It looks like the UK is going to see a decline on the basis of the uncertainties around, the ongoing effects of the credit crunch, a housing market slowdown and a general faltering of consumer confidence,” he said.
“And we think housing sector weakness will also be a negative factor in Spain,” he added.
“Italy is also set to see a decline on what was an inflated 2007 – the new scrapping incentive will not have the scale of positive impact that the previous one had.”
“But there are some positives around,” Poskitt maintains.
“The prevailing German market weakness ahead of a new CO2 tax on cars has depressed the market for some time now. The uncertain tax situation should be resolved soon and we expect the market to pick up in Germany later this year,” he said.
“The French market ought to see some growth this year,” Poskitt says .
“We don’t think the French market will grow strongly, but we expect tax cuts will help to underpin some market growth in France.”
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