What is in this article?:
- European Automakers on Bumpy Trail to Slow Comeback
- Pent-Up Demand a Structural Plus for Automakers
Pent-up demand after six years of declining sales is a structural plus for the industry, but it is up against a population that not only is aging but also is growing slowly.
Car-sharing advocates tout economic advantages.
PARIS – The long decline of the European car market apparently hit bottom sometime last summer, five years after the 2008 financial crisis set it off.
The recovery will take about the same amount of time, say most analysts, and Europe may never reach the same sales-per-person ratio it had in 2007, when registrations totaled 15.96 million, or one new car for every 31 residents.
The good news is that there is universal agreement the market will grow in 2014.
UBS Securities in London sees improvement “of something like 2% to 3%, with the volume coming from the South of Europe,” says chief automotive analyst Philippe Houchois.
Inovev in France forecasts growth of 3% to 3.5%. However, notes Inovev’s Jean-Michel Prillieux, some 4 million units have disappeared since 2007 and the growth forecast for next year “is a long way from catching up. Normally, market growth will continue through 2018, but it will remain less than 2007.”
Last year, 12.05 million cars were registered in the European Union, and this year registrations likely will be down 2% to 3% again, to about 11.75 million units, or about one car for every 43 of the 506 million residents of the 27 countries.
The outlook will differ for every automaker, of course, because they all are different, as are the 27 countries. However, the economy overall in Europe is stagnant.
The European Commission forecasts growth of 1.4% next year in the EU, and only 1.1% in the countries with the euro currency. Germany, France, Italy and Spain are in the eurozone, and they accounted for 62.9% of all car sales in the first nine months, according to the ACEA automotive industry association.
In terms of business, the premium makes are in relatively good shape as their customers have suffered less than middle class during the downturn. The volume makers have additional economic problems related to their capacity to build more cars than the market demands, and they remain cautious.
At, whose market share has fallen 29.9% in Europe since 2007, spokesman Adrien Schmitz says “incoming data suggest euro-area economic and industry conditions have begun to stabilize and are consistent with a modest recovery that could occur in the near term.
By mid-decade, we expect the industry to grow only modestly.”
However, he says,believes “the wider European region (51 markets) presents a significant opportunity for profitable growth and expects vehicle sales to grow 20% in the next five years to 23 million vehicles.”
At, which has regained 0.3 share points this year after several years of loss, spokeswoman Rie Yamane says, “At this stage, we can’t say more than the fact that we think that the evolution of the market in Europe will be moderate growth for 2014.”
Earnings in Europe are lower than those in the U.S. because, unlike their Detroit counterparts, European automakers didn’t reduce capacity during the crisis, says Philippe Houchois, managing director-UBS Securities in London.
“The only OEM that attacked capacity aggressively in Europe is Ford,” he says. “Others have done some but not enough.”
Where European capacity has dropped from about 25 million units to 23 million, he says, U.S. capacity was cut from 18 million or 19 million to 14 million.