For the first time since the end of the global financial crisis back in 2009, the western European car market has seen a small recovery, edging out the sales last year by 4.7%.
On the other hand, the concerns of the European auto industry grow even further heading into 2015, as the market overall has remained deeply below the pre-recession levels, the market forecasts are not very positive for the year and the automakers are entrenched in an incentive war that dents profits. According to data coming from LMC Automotive, the December growth was the region’s 16th consecutive month of sales gains and the full year tally stood at 12.1 million autos. For comparison, the result recorded last year is 2.7 million units lower than the figure compiled for the 2007 year, before the financial crisis.
Additionally, economists fear that the European region could be heading into a Japan-style economic stagnation as the annual consumer price inflation in the eurozone was negative in December, at 0.2%, data from Eurostat showed.
LMC predicts now that the Western European region’s climb this year will be almost flat, slowing down from almost 5% to just 2.5%. “If GDP contracts, then household incomes will fall, confidence will be dented further and car markets will inevitably fall. The fragile recovery that we have seen thus far in Europe would effectively be undone,” comments LMC analyst Jonathon Poskitt on the prospects of price deflation. The analyst added that positive factors could also contribute to support the European economy and auto market into 2015: bank interest rates are forecasted to remain at low levels, the falling prices become extra cash for consumers and the lower level of the euro could provide a timely boost to car exporters.