Carmakers still struggle with weak Europe image

There are several hints that Western Europe’s weak car market may have finally hit bottom, but the latest economic numbers still suggest years of profit-less stagnation for troubled non-German mass car manufacturers.

Western Europe’s car sales rose a healthy looking 4.2 % in October to 974, 930, according to the European Car Manufacturers Association. But this reflects a market bouncing along the bottom, rather than one about to rally.

Car sales in Western Europe are down by just under 3.5 million a year from the pre-recession high of 14.79 million in 2007. Most experts don’t expect this to be reached again before 2019 or 2020.

Carlos Da Silva, Paris-based analyst for IHS Automotive, said latest figures suggest sales have reached a low point, and a certain level of natural replacement is now in play.

“Pent up demand that has been building along the crisis has started releasing and this is a welcome fact: this will gradually alleviate the tension on the European car (market) that has been ageing at an accelerated rate with the sales trough,” Da Silva said.

LMC Automotive also believes the bottom has been reached and hints that an upturn may finally be starting to emerge.

“However, given the economic and political fragility in the region, it would be optimistic to expect a sustained period of increasing sales in the near future, though we do expect sales to start to steadily improve from 2014,” LMC Automotive said in a report.

LMC Automotive now expects Western European sales growth of 2.8 % in 2014, after a 2.3 % decline in 2013. But a return to pre-2007 crisis sales levels soon is unlikely because of weak consumer and corporate confidence and limited economic growth.

Car sales prospects are also being undermined by structural changes in Europe – including the rising cost of car ownership, increasing vehicle life-spans, and measures by some cities or countries to deter car ownership.

Via Forbes