European car sales skid to 20-year low
Despite hopes that the European market might have finally bottomed out, car sales for the first half of 2013 plunged to a 20-year low, according to industry data, with little sign that the downturn is about to reverse itself.
According to new data from the European Automobile Manufacturers Association, new vehicle registrations continued to slip with a decline of 6.3 percent in June, bringing total sales for the first six months of the year to just 6.44 million, a 6.7 percent drop.
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"Little will change until the middle of next year," warned BMW CEO Nobert Reithofer in a German interview, predicting the market will be down about 5 percent for all of 2013. "Perhaps we will see a slight pickup in Western Europe in the second half of 2014."
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The European slump reflects the region's wider financial problems touched off by a sovereign debt crisis that nearly sank the economies of Greece, Spain and several other nations with overextended debt.
But the situation appears to have been worsened of late with signs of a slowdown in some of the Continent's more powerful markets, notably Germany and France where exports have been on the decline in recent months.
As a result, the ZEW index of German investor and analyst expectations took a sharp tumble this month. Other surveys have shown similar declines in consumer confidence.
Most makers and most of Europe's national markets continued to shrink last month. Among the five largest markets, only the U.K. was up, a countervailing 13 percent, while the other regional powerhouses, Germany and France were down 4.7 percent and 8.4 percent, respectively.
The United Kingdom, in fact, has been running counter to the downward slide all year, so far gaining 10 percent.
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Among smaller markets, sales plunged 42.7 percent in Cypress, the latest European country to receive a bailout aimed at helping restructure its lopsided sovereign debt load.
Even the traditionally strongest manufacturers have been struggling this year. Volkswagen declined 4.4 percent in the first half, with its high-line Audi brand down 8.8 percent, according to industry figures. Italy's Fiat was off 10 percent, with France's Peugeot off 13.3 percent, one of the worst declines of any major brand and a further worry for a company desperate to reverse mounting, multibillion-dollar losses.
Honda was the rare winner among mainstream brands, with a sales gain of 6.4 percent.
Only a handful of luxury brands bucked the industry downturn, with Mercedes up 3.5 percent, Land Rover rising 10.2 percent and Jaguar gaining 15.5 percent. But BMW was down 7.7 percent.
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With industry insiders and analysts using terms like "dreadful" to describe the current state of the European auto market, it's unclear how long it will take to reverse course.
A growing number of makers aren't taking chances; Ford, Peugeot and General Motors have already laid out plans to close plants and cut employment. Fiat is pressing its Italian union for further concessions—and threatening to transfer work overseas as the alternative.
The likelihood of a turnaround before at least mid-2014 is something few are now willing to predict.
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