Europe Vehicle Sales Down, But Not Off Cliff

Vehicle sales in Europe so far have not fallen off the proverbial cliff, a scenario that might have been expected given the region’s economic turmoil and likely resulting blow to consumer confidence.

That’s not to say the picture is healthy, as volumes have declined from year-ago levels in every month during first-half 2012. Based on results from the 24 countries tracked by WardsAuto, first-half sales totaled 9.592 million units, down 4.8% from like-2011’s 10.08 million.

Still, the 6-month tally topped the same period in 2009 and 2010 and, even with several countries teetering on economic collapse, sales declines have not come close to the psychological abyss of double-digit losses in any single month this year.

That doesn’t mean twin-digit declines won’t happen between now and the end of the year, but there’s a good chance the region will be able to hold ground near 2011 levels in second-half 2012.

For one thing, the first six months have suffered from some tough year-ago comparisons that will ease in the second half. Monthly results during January-June 2011 averaged gains of 6.3%, while increases in the latter half of the year averaged a more modest 3.4%.

June’s performance is another sign sales may not plunge in the second half. Deliveries in the month fell only 0.9% below year-ago, the best year-over-year comparison since a 0.8% shortfall last December.

Furthermore, accumulated results for countries that have reported so far for July – accounting for about two-thirds of Europe’s volume – are up 0.6% from year-ago.

Russia, the first-half growth leader measured in both volume and percentage increases, started the second half where it left off, with deliveries up 12.6% in July.

Russia’s July result followed a 9.8% gain in June that capped a 14.7% rise for the year’s first half. The country’s share of region sales reached 15.5% during the first half, compared with 12.8% in like-2011.

The U.K, which posted an increase of 1.7% during the first half of the year, had a hefty 9.8% gain in July.

Another July bright spot was Ireland, up 10.1% and marking its first year-over-year uptick since January. Although it accounts for less than 1% of the region’s volume, Ireland is one of the major European economies stung by severe debt problems.

Other countries posting July gains were Belgium, Denmark, Norway, and Slovakia.

Despite those optimistic wrinkles, headwinds could worsen.

Negative second-quarter economic growth by European Union countries likely will dampen consumer confidence further. There also are signals growth is hitting the brakes in Germany too, the region’s vehicle-sales leader and up to now its economic rock.

Also, combined sales from the five countries most associated with debt problems – Ireland, Greece, Italy, Portugal and Spain – continue to worsen. Second-quarter deliveries slid 21.3%, compared with a slightly smaller 18.7% drop in the first quarter. Together, those markets accounted for 15.8% of Europe’s first-half sales, compared with 18.8% in like-2011.

Unfortunately, most if not all of the five debt-plagued countries are expected to see conditions worsen before they get better.

Other markets seeing January-June increases were Switzerland, up 11.6%; Poland, 6.1%; Czech Republic, 5.7%; the Netherlands, 0.9%; and Norway and Germany, both up 0.5%.

Key countries posting first-half declines included Portugal, down 44.0%; Greece, 41.9%; Italy, 21.4%; Turkey, 19.8%; Romania, 15.0%; France, 13.2%; and Spain, 10.4%.

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