Analysts predict that the auto market in western Europe will not revive until 2019, which might lead to further plant closures in the region.
Auto sales in western Europe are expected to drop to 12 million next year, from 13.2 million in 2012, according to AlixPartners. Sales are due to remain flat until the end of the decade, as unemployment continues to increase, the consumer confidence drops, reducing the spending power.
“Flat is the new up,” said Stefano Aversa, co-president of AlixPartners. “The good news is that the decline will stop but the bad news is that it will not get better anytime soon.”
Since 2007 auto sales in western Europe have dropped by almost a quarter, as the economic growth has been affected by the financial crisis, increased unemployment and falling consumer spending. Although auto sales in the UK have done amazingly well, this will be offset by the continued pain in Spain, Italy and France. The major consumer trends which affect auto demand are the low interest in ownership among young drivers, as well as a shift away from driving seen among older Europeans.
“We see a continuing reduction or bottoming out this year,” Andy Palmer, executive vice-president of Nissan, told the Financial Times regarding the European market. “There is nothing obvious we see to say that a recovery is on the way.”