Italy: New car sales will likely drop 5.6% this year image

Italy’s new car sales will drop to about 1.6 million cars after the country would tumble into recession this year.

“UNRAE’s forecast as of December was for average 2012 car sales to come in at about 1.68 million, and that looks optimistic to us right now,” Gianni Filipponi, managing director of the trade group made up of foreign car makers, told Reuters.

“This level [that it is falling to] is not sustainable,” Jacques Bousquet, the head of Unrae, said in a presentation to an industry event.

In addition, LMC Automotive estimates industry-wide car sales in western Europe will fall to 12.1 million vehicles in 2012. The drop in Europe will be offset by gains in China and the U.S., the world’s two biggest auto markets, analysts forecast.

“It’s going to be tough for everyone, not just for Renault,” Mr. Ghosn said in an interview on the France Inter radio station.

The 1,748,143 units sold last year in Italy is the lowest total since 1996, according to UNRAE. For the whole of 2011, Fiat sales were down 13.8 percent at 514,629. The market share was 29.4 percent, down by about one percentage point from the previous year.

Italy’s ability to overcome the current crisis is increasingly in doubt. After the downgrade of Italy’s rating by Standard & Poor’s in September 2011, the other two major credit rating agencies — Moody’s and Fitch —made similar cuts in October. Moreover, the outlook on the rating remains negative and the possibility of further downgrades in the next months is high.

After GDP growth of just 0.6% in 2011, Ernst & Young expects the economy to shrink by 0.8% in 2012 — down from a previous forecast of 0.4% growth. Growth is projected to return gradually, but it will take years before the reforms produce the desired effect.