European auto recovery still vulnerable to economy headwinds image

New car sales across the continent have grown 6.2% in October, but the recent recovery has continued to be supported by demand increases triggered by boosted incentive programs.

The previously recession-hit southern countries were the main drivers of the advances last month as sales in all major countries were positive – save for France. The continued problems of the latter signal the country’s trouble in finally restarting growth. Analysts are also weary, signaling that a resurgence of the economic slowdown could immediately botch the already frail car market revival – which has slumped almost six years to a record two-decades low.

“The recovery in the European auto market is mainly fuelled by catch-up effects in the (southern) crisis countries,” said Peter Fuss, a partner and automotive specialist in Ernst & Young’s German practice. “It remains weak and susceptible to a renewed economic setback that today seems likely again.”

According to the Association of European Carmakers (ACEA), figures compiled for the passenger car registrations in the European Union (EU) and European Free Trade Area (EFTA) increased to 1.11 million autos last month. That compares to 1.05 million in the same period of 2013. While it remains well behind the peak registered before the onset of the latest global economic crisis, the European new car market has managed to grow for 14 straight months.

Via Reuters