European car market plunges to lowest since 1995

[ausrutherford]

By Christiaan Hetzner and Helen Massy-Beresford
Jan 16, 2013
Reuters

* EU 2012 new car sales reach lowest level since 1995

* Sales fall 8.2 pct in 2012, worst contraction since 1993

* Car sales fall 16.3 in December alone

By Christiaan Hetzner and Helen Massy-Beresford

FRANKFURT/LONDON, Jan 16 (Reuters) - Demand for new cars in recession-bound Europe fell to a 17-year low in 2012, leaving mass market manufacturers little hope for this year as they try to cut costly excess factory capacity and aggressive discounting dents their margins.

Registrations data released on Wednesday also showed the biggest annual drop since a 16.9 percent downturn in 1993, highlighting the crisis for automakers in Europe. Consumers are fretting over austerity measures, job security and rising living costs, and those who want to buy new cars are struggling to secure credit.

Even Germany's mighty Volkswagen suffered a drop in sales, according to the figures from the European automotive industry association ACEA. However, South Korean brands Hyundai and Kia, which are making an aggressive push in Europe, proved it is possible to expand sales even during a grim downturn.

Peter Fuss, senior advisory partner at Ernst & Young's Global Automotive Center, said an industry practice of registering new cars before offering them as used vehicles at a discount was flattering even the dire new sales figures.

"The actual decline is much worse than the statistics would have us believe as sales figures for the year were artificially inflated as a result of self-registrations by dealers and automakers, especially in the region's biggest market, Germany," said Fuss.

Mass market carmakers are cutting jobs in underused plants across Europe, with Renault the latest to announce job losses, following Honda, Ford, PSA Peugeot Citroen and Opel.

New car registrations fell 8.2 percent to 12.05 million vehicles in 2012, the lowest level since 1995, ACEA reported. Losses in all major euro zone economies, combined with two fewer working days on average, sent European Union registrations tumbling 16.3 percent last month to 799,407 vehicles, it added. This marked the worst plunge in 26 straight months - since October 2010.

The industry tried to satisfy more robust demand for second-hand cars through the self-registrations.

[ausrutherford]

It is getting worse




December sales are even worse than the year, not a way to go into 2013.

Greece and Portugal were down around 50% each this year.

[Butz]

Europe is done for. Time for WWIII.

[rozz]

Who care about the French!

[rsbaker]

European Governments and their people have to decide whether or not they are a "European Union" or not. Union means "together" and if indeed they are together, then they must do whatever it takes to fix the problems that they have, as painful and distasteful it may be. Nobody like bailouts, we do not like them here in the United States and it is clear that they do not like them over there, but it has become clear that the European countries collectively must decide to share the burden and help bail out the failing economies like Greece, Portugal and Spain. If they do not these countries will drag down the rest of Europe, and Europe will continue to act like a boat anchor on the world economy. The US bailed out banks and the 2 auto manufacturers only because allowing them to fail would have sent the economy into a death spiral after the crash in the fall of 2008. So far, the Europeans have only been fiddling around the edges and are not making the tough decisions to do what they must be done do to stop this economic crisis and get back on a path of growth. As soon as they do auto sales will quickly rebound.

[staspeterson]

It will only be when the automotive companies face the exsiting heavy over-capacity and start to reduce old over-capacity. The American auto companies did so before, during and after their enforced Bankruptcies. Unfortunately, European laws do not generally provide great flexibility for managed bankruptcies and business reorganizations.

The problem is exacerbated by the greedy politicians who preach austerity for everyone except themselves, the governments, and their bureaucrats. Europe just cannot afford the Welfare State that they have erected.

Unfortunately no one is pnishing the guilty politicians. For example, the Papandreous family, grandfather, father and son are as responsble for Greece's governmental over expansion as anyone. Yet there is no reaction yet. I fear that Europe will wait until the inevitable over reaction and excesses, as occured in pre-Napoleonic France.

[tbirderic]

This should surprise no one. Cars will figure less prominently in post-industrial economies. Only a matter of time before car sales in the U.S. reach their peak and begin to decline as well.

[jpd80]

This should surprise no one. Cars will figure less prominently in post-industrial economies. Only a matter of time before car sales in the U.S. reach their peak and begin to decline as well.

I disagree, the US market is entering a stage of rediscovery by buyers which contrasts with the economic woes in front of the EU. Until the EU sorts out is monetary mess, car sales will reflect the depressed nature of state economies there and getting manufacturing consensus across differing countries will be much harder than the reorganization done in the USA (one country).

[ausrutherford]

This should surprise no one. Cars will figure less prominently in post-industrial economies. Only a matter of time before car sales in the U.S. reach their peak and begin to decline as well.

US population is growing, Euro population is decreasing.

[Sox]

Hey I've got an idea! Now that the Einsteins at the RenCen have locked up the very desirable advertising property of Manchester United soccer club for a mere $559 million, maybe we can throw another half billion at a cricket club or a rugby club. Or GM could invest it in product, having decided that advertising in a dead market is absolutely pointless. Gee, which will it be?

[tbirderic]

And our population is becoming more urbanized by the day. Urban dwellers have less of a need for cars.

[70eldo]

Isn't it assuring that it merely reached a point we've been before?
It'll pass...

[Tre-Tre]

The good thing is things probably wion't get that much worse.

[44 mpg by 2010]

The US is a good alternative market for those that really want to increase sales in the short term with the "right" products and pricing ... provided they already have a US presence.

[ausrutherford]

The good thing is things probably wion't get that much worse.

I would not bet on that...