Automakers Rely on the UK Market to Keep Sales Up image

Although the UK was the only market with positive sales results in Europe, to maintain the growth automakers will have to come with big incentives this year.

Last year auto sales in Europe dropped to a 17-year low, with the UK market being the only one posting a 5.3% growth, even if with only 2 million units, sales were 15% under the market peak reached in 2007. This year automakers are forced to come up with special offers and cheap loans, and also boost sales of fuel efficient vehicles.

So far sales in the UK are on the right track with an increase of 11.5% last month, compared with Germany and France which saw their sales fall 8.6% and 15.1% respectively, according to European industry group ACEA. Auto industry body SMMT predicts UK sales will go up 0.6% this year and 2.6% in 2014, depending on how fast will recover the consumer confidence. Ford is already offering a 12% discount for many of its new models, while GM’s Vauxhall comes with a deposit contribution on some models and interest-free finance for up to 5 years.

“I don’t think mass-market [car] makers are making much more than a 3 percent margin at the moment. I’d be happy with an average of 3 percent per sale in this economy,”said Derek Jarvis, a car dealer in Bromley, south east England.