European August Sales Drop, Germany Affected by Crisis image

With Germany affected by the economic crisis, Europe’s auto sales saw its biggest decline in six months in August.

Last month auto sales dropped 8.5% to 722,483 units compared with 789,458 units over the same period last year. From January to August sales decreased 6.6% to 8.59 million units. Ford reported a 29% loss in August, Fiat and GM each with 18%, the biggest decline since a 9.2% drop in February. Germany, the country which helped offset declines in the other markets, saw its sales drop 4.7%.

“We’ll probably see a continued weakness in southern Europe and in addition to that an accelerated weakness in France and Germany,” said Arndt Ellinghorst, a London-based analyst at Credit Suisse Group AG.

Auto sales in Italy dropped 20%, in France 11%, Spain saw an increase of 3.4% and so did the UK with 0.1%. Analysts predict that car sales will drop 9% by the end of this year in Europe and 3% next year, expecting a recovery beginning with 2014. The last month of decline have pushed GM’s Opel and Peugeot into seriously considering closing the French and German car-plant in decades.

Even with the announced plant closures, excess supply in Europe will only be reduced by a fraction. Analysts predict that by the end of this year overcapacity in the market may more than double reaching 2 million vehicles.