According to data released by JD Power Automotive Forecasting, car sales in Western Europe grew by 4.1% over last year in June, the first positive year-on-year result for over a year.
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The result reflects the continued impact of incentives, especially in Germany where the gain on last year was 40.5%. JD Power said that the German car market is up 26.1% so far this year and may hit 4m units for the whole of the year.
Car markets in France and Italy also continued to benefit from incentives and, in both cases, positive gains were achieved in June. The French market rose by 7% while car sales in Italy were up by almost 12%.
However, the UK and Spanish markets remained in strongly negative territory, though it is clear that incentive schemes in both countries are having a positive impact and helping to moderate the rate of decline.
Scrappage incentive schemes, combined with significant discounts from vehicle manufacturers, are producing a total Western European car market which could be on a par with or close to that of 2008.
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By GlobalDataJD Power said that the incentives have had the effect of stabilising the market and preventing what would otherwise have become a collapse.
However, the firm cautioned that the post-incentive environment is likely to present a major challenge to the industry in 2010.
The key market in this respect, it said, is Germany. When the incentive scheme expires at the end of 2009 as planned, the negative impact ‘will be large’.
Past incentive schemes in France, Italy and Spain have been renewed once it has become clear that a given market will suffer upon the incentive expiry, it said, so nobody can say with confidence which schemes will be renewed in 2010.
JD Power warned that a negative German market correction from this year’s expected near 4m unit market could send 2010’s German car market as low as 2.6m units.
JD Power forecasts a West European car market of 13.33m units in 2009, which compares with 13.56m units in 2008 and 14.8m in 2007.
