Gloom returns to EU car industry
(PARIS) - The EU car industry was again badly hit by weak demand in May when sales plunged even in the so-far resilient German market, monthly data from the European Automobile Manufacturers' Association showed on Tuesday.
The British auto market was the only one in 26 of the 27 countries of the European Union to show an increase on a 12-month comparison.
The association said that sales in the European Union in May fell by 5.9 percent to 1.04 million vehicles, the worst performance for May since 1993.
In the first five months of the year, sales in the European Union, excluding Malta, fell by 6.8 percent.
In April, auto sales in the EU area had staged a modest rally of 1.7 percent but this was because the figure for the comparable period, in April 2012, had been particularly weak, and also because the Easter holiday fell in March this year, pushing some sales forward.
Sales in Germany fell by 9.9 percent in May on a 12-month basis.
Germany is both the leading producer of cars in Europe, achieving record export performances, and has also been a strong market for autos, in contrast to weak sales in European countries suffering from slow growth and even recession.
The EU market in general and the German market in particular are important to countries in central Europe such as the Czech Republic where auto production for export is a big driver of the economy.
Sales of autos in Spain fell by 2.6 percent, by 8 percent in Italy and by 10.4 percent in France.
In France, sales by PSA Peugeot Citroen slumped by 13.2 percent, and sales by Renault and its Dacia brand, based in Romania, fell by 10.0 percent. PSA is struggling to overcome a financial crisis and to manage deep restructuring.
The weakness in the EU auto market, reflecting weak consumer confidence and spending and also weak investment by businesses, has cut deeply into demand for steel, adding to pressures on European steel manufacturers, such as ArcelorMittal.
Carlos da Silva, an analyst at IHS Automotive, said the situation is expected to improve in the second half of the year.
"The fact is that May brought some worrying figures, notably for the German and French markets. Still, only considering these results would be forgetting that the United Kingdom kept booming impressively while Spain and Italy did not fare that badly after all, given the economic conditions."
Da Silva estimates the West European car market will hit the bottom this year, with a decline of four percent before seeing a pick up of around three percent in 2014.
Business advisory firm AlixPartners had a more pessimistic view on the situation, however.
In a recent study, it said it expects a market stagnation in Western Europe, with annual sales reaching just 12 million cars until 2019. This can be compared with 16.8 million car sales per year before the 2007 crisis.
"It is unlikely that public aid programmes to stimulate demand are implemented due to budget constraints," it added.