Western Europe’s car market endured a blow in February as the German market fell by 15% — overall West European car sales fell by just under 4% in response, according to JD Power Forecasting.

The February 2007 seasonally adjusted annualised rate of sales, at under 14.5m units/year, depicts a market running below recent norms (for example, the full-year 2006 market was almost 14.8m units).

The German market suffered from an extension to the VAT-increase hangover in February as the strong sales of late 2006 continued to take a negative toll on early 2007 volumes. This slightly poorer-than-expected result will have a direct negative impact on volume expectations in 2007, and it gives rise to the somewhat larger question of whether there has been any lasting change in the German market level.

However, JD Power said it continues to expect that improving consumer fundamentals will lead to a rise in underlying German demand, but the weakness in early 2007 is now expected to lead to a full-year fall of 2% or more, before the more positive trend begins to emerge in 2008.

The results of the new eco-incentive in Italy have, so far, been very positive. Sales are up by over 3% in the year to date, and the likelihood is for an extended period of strong sales. JD Power forecasts that the Italian car market will rise to 2.5m units in 2007 in response to the scheme, a 7% gain.

Italy will thus become Western Europe’s star market — in terms of volume added — in 2007. The forecaster notes though that all incentives in Italy in the past have come to an end at some point, resulting in a surge of sales at the end of the incentive and, then, a sharp drop in sales. It is assumed by JD Power that this will take place in 2008.

The French market put in a solid performance in February with stable sales and a selling rate showing improvement on last year’s overall market. Pricing factors are likely to prevent a rapid recovery this year, though a small gain is anticipated, Power says.

In Spain, the market continued to soften in February but as we move into the final months of 2007, JD Power expects the Prever incentive to be scrapped leading to a small pull-forward in sales and weakness in early 2008.

UK sales were marginally higher than expectations but, with February being a statistically weak month (for example, March volumes can be five or six times that of Febuary), the overall impact at the European level was minimal.

JD Power West European Car Sales Forecast

  • 2004: 14.64m (+2.3%)
  • 2005: 14.65m (+0.1%)
  • 2006: 14.77m (+0.8%)
  • 2007: 14.90m (+0.9%)
  • 2008: 15.05m (+1.0%)

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