August Sales Pick Up in Europe, But Full-Year Outlook Not Rosy

PARIS – Vehicle sales in Europe rebounded in August but not enough to push deliveries above year-ago levels during the first eight months of 2011, and the economic trends buffeting the continent could depress the market even further.

Sales fell by 2.0% in July but rose 7.7% in August, bringing the 8-month total to 8,888,793 units, 1.3% behind like-2010.

Mercedes among hottest-selling brands in August.

Industry analysts say the sales skid will accelerate during what remains of the year.

PriceWaterhouseCoopers in London predicts that for the year, the market will be down 2.5% to 13.5 million units, says Michael Gartside, an analyst at Autofacts-PwC. That implies a decline of 4.2% for the September-December period.

"With the debt crisis, the downward revision of economic forecasts and the weak outlook for the labor market, many European countries could be facing some difficult months,” says fellow analyst Joseline Chabert.

National debt, falling stock markets and debates about the common euro currency have led the European Commission to predict overall economic growth of only 0.1% in the fourth quarter after rising 0.2% in the third quarter. Previously, it forecast 0.4% growth in both quarters.

Deliveries in Germany, Europe’s largest vehicle market, have been consistently positive – up 9.9% in July, 18.3% in August and 11.2% for the first eight months.

Germany has fully digested the period of incentive-inflated sales in 2009, and its auto makers have capitalized on exports of luxury cars to China and other emerging markets. PwC says full-year sales in Germany should climb 9.7%, implying a small decline to come.

Sales in France crept up 0.4% during the first eight months, compared with like-2010, but the consultancy expects the year total to be off 6.1%.

The other large markets already in decline and expected to stay down are the U.K., -6.1%, Italy, -12.0% and Spain, -22.2%.

Not everyone shares the negative outlook for European sales in coming months. Plastic Omnium’s CEO Laurent Burrell is unequivocal: “What I read in the newspapers does not correspond with what I see every day. July and August were excellent, and the perspective for the coming months is very good.”

August is the year’s slowest sales month because many Europeans vacation then, and the monthly totals are not always indicative of trends. (Deliveries in the best month, March, typically are five times higher.)

For most high-volume brands, increased August sales somewhat offset year-to-date declines. Renault deliveries grew 1.6%, Ford rose 19.9% and Peugeot inched up 0.8%. But for the year, Renault is down 10.4%, Ford is off 4.6% and Peugeot 6.8%.

Brands based in Germany fared particularly well in August, as most Germans tend to vacation in July. Volkswagen sales climbed 19.1%, BMW jumped 32.3%, Mercedes-Benz soared 34.4% and Opel rose 7.2%.