European turnaround positively affecting sales, though profits continue to trail image

European automakers have painted a bright picture of a continental turnaround since sales rebounded massively after the first five months of the year, thanks to low unemployment levels and the drop in global oil prices.

Rising consumer confidence has turned into sales data that were unforeseen by numerous companies. “Clearly there is underlying strong demand coming through from the improving economic environment and consumer sentiment, ” commented back in April Ford of Europe’s vice president of European sales, Peter Fleet. The automaker than raised its key forecast for the European market for the overall year by 400,000 units for 15.2 million to 15.7 million autos. Industry association ACEA has also said that through April, the customer demand for new car sales in the European Union has been on the rise for 20 months in a row – with sales after four months up eight percent across the region.

While European automakers are continuing to diversify internationally, the home continent remains an important source of revenue. That’s why some executives are pointing out to the fact that a higher volume is not necessarily equal to increased profitability. “So far this year the European market had a growth that has been more quantitative than qualitative,” commented Peugeot chief executive officer Maxime Picat. That’s because Spain’s auto market has been filled with margin-killing incentives, Italy’s growth has been fueled by rental car agencies that were gearing up for the World Expo in Milan that started in May and German self-registrations, which only clog the sales channel, are near record highs.

Via Automotive News Europe