A recent study shows that 2013 will be the toughest year for auto industry in Europe in the past three decades.
Auto market in Europe is in free fall due to the widening economic crisis and the increasing level of unemployment. Automakers have seen their sales drop for 18 consecutive months as people avoid making big purchases, worried that they might soon be left without a job. During the first quarter new car sales in Europe dropped 10% to 2.9 million units, compared with 3.3 million units in 2012. Sales in Germany dropped 13% during Q1.
Most European markets saw double-digit sales drops, with Spain down 11.5%, Italy down 13% and France 14.6%. Analysts were surprized by Germany’s fall, considered to be relatively stable and even prosperous.
“How can it be so bad when employment and economic growth remain solid?” said Max Warburton of Bernstein Research.
Analysts predict that sales in Europe this year will fall 3.3% to 11.8 million units, while the US will reach 15.5 million units and China 20 million vehicles. The decline in the auto industry affects automakers’ profits, with PSA Peugeot Citroen, Ford, GM and Fiat all reporting losses of 5 billion euro last year in the region.