Infrastructure

Infrastructure

Western Europe auto sales up 8.8% in September

09 October 2009 14:50 (UTC +04:00)

Bakuâ€“ APA-Economics. W. Europe’s car market grew by 8.8% year-on-year to 1.32m units in September, according to data released by the released by JD Power.
The seasonally adjusted annualized rate of sales topped 13.7 mn units/year as incentives supported demand. However, the market is now showing signs of a slowdown.

There are now early signs, in Germany, that the car market is about to fall sharply in the post-scrappage-incentive environment.

The seasonally adjusted annualized rate of sales in the February-August period, when the â‚¬5bn scrappage scheme was in full swing, averaged 4.17 mn units/year. In September, this fell to 3.56 mn units/year. Under any historical comparison, this is still a strong market for Germany, but it is likely that sales will continue to weaken in the months ahead â€” the final applications for the scheme were accepted on 2 September.

The German government has indicated that no similar such direct support for the car market will be available, though there may yet be other measures introduced to help the automotive industry. On balance, however, we are not optimistic that minor changes can reproduce the profound boost of direct incentive support, so the market is likely to undergo a major reduction, lasting well into 2010.

The fall in German sales is the major factor underlying our expectation that West European car sales will fall by around 9% in 2010, as shown on the previous page.

Other countries may extend their schemes into 2010, and we now expect this to take place in France and Italy â€” this does not imply growth in those countries for 2010 but, rather, relative stability on the 2009 level. We see a second incentive renewal as being unlikely in the UK, after the recent top-up of the scrappage incentive fund, while a top-up is also assumed for Spain but, again, this offers only the likelihood of stability, not growth.

Furthermore, in the absence of a substantive economic recovery in Western Europe in 2010, the chances of any markets â€œcoming to the rescueâ€ to offset the likely 2010 decline in Germany are relatively small.