European car sales forecasted to rise in 2014 image

Roughly hit by the economic crisis, the European car market is finally set to grow in 2014 after its six-year slump, which may ease retail pricing pressure that has saddled some of the region’s carmakers.

With economic conditions showing a tepid recovery in most European countries by the end of 2013, buyers are finally starting to feel confident enough to make a long-delayed purchase of a new car – albeit at discounts of up to 24 %.

Automakers and industry watchers expect vehicle sales to increase by up to 3 % this year. The rebound will bolster the industry’s bottom line, particularly for automakers such as Fiat and PSA/Peugeot-Citroen that are most exposed to the deep recession in southern Europe.

“Discounts are tapering off but will continue through 2014,” said Carlos Da Silva, head of European light vehicle forecasting at IHS Automotive, which is predicting a 2.5 % sales rebound in 2014.

However, industry observers say mass-market producers still aren’t lean enough to make money in a market forecast to hit less than 13 million in 2013, nearly 25 percent below its 2007 peak.

While the United States addressed its own crisis aggressively in 2009 by cutting factory capacity, creating the foundation for its current profits, Europe, with nearly 300 factories in 2012 stretching from the tip of Spain to deepest Russia, only did half its homework. Politicians who want to keep plants open to protect jobs have hobbled its recovery. So its rebound is weaker, and will be less profitable.

Via Automotive News Europe