Europe: Passenger Car Sales Down 8 Percent in Full-Year 2008
Financial crisis and economic slowdown lead to drop in spending – German brands increase market share – diesel retains its market leadership in Western Europe
Frankfurt am Main, January 14, 2009. The international financial crisis and the dramatic slowdown of the economy have had a negative impact on passenger car sales in Europe. A total of 14.7 million new vehicles were registered in 2008, representing an 8-percent decrease from the previous year. This result was expected, according to the German Association of the Automotive Industry (VDA), because banks are reluctant to give loans and the bad economic situation has left consumer confidence at a low ebb. As a consequence, sales in Western Europe dropped by 8 percent to 13.6 million passenger cars, with the decrease being particularly dramatic in the second half of the year. Whereas sales dropped by only 3 percent in the first six months of 2008, they plummeted by 15 percent in the year's second half. Although sales also weakened considerably in the new EU member states in the second half of the year, they were relatively stable in 2008 as a whole, decreasing by only 1 percent.
The German manufacturers managed to further strengthen their outstanding position in Western Europe by increasing their market share by half a percentage point to more than 47 percent. In the new EU member states, German manufacturers maintained their high market share of approximately 44 percent. Diesel engines retained their market-leading position in the dramatically contracting Western European market. With a market share of almost 53 percent, they remained a stable force on the market. Once again, more than half of the diesel passenger cars sold in Western Europe bore the nameplate of a German manufacturer in 2008.
Registrations of new passenger cars totaled 2.1 million units in France last year, or 1 percent fewer than in 2007. Although the market initially benefited from the incentives of the bonus-malus system introduced at the beginning of 2008, consumers' purchasing decisions in the fourth quarter were increasingly influenced by the weak economy. The new tax regulation primarily benefits French suppliers, who increased their sales by 1 percent for a market share of 53 percent. Foreign manufacturers, on the other hand, saw sales of new vehicles drop by 3 percent. The German automakers performed as well as the foreign brands, and achieved a market share of above 28 percent.
Registrations of new cars in the UK totaled 2.1 million units in 2008, and therefore fell 11 percent short of the previous year's result. Demand for both privately and commercially used cars decreased, dropping by 15 percent and 9 percent, respectively. Private consumers accounted for 42 percent of total passenger car sales. The real estate crisis was a major burden for the British economy last year, as high interest rates and falling house prices dampened people's willingness to buy new products. The German brands managed to buck the downward trend, however, increasing their market share by two percentage points so that half of all the passenger cars sold in the UK bore a German company nameplate.
In Italy, passenger car sales totaled 2.2 million vehicles last year, a 13-percent decline from the record level set in 2007. The positive effect of the scrapping premium increasingly diminished as the year progressed. Fears of inflation and recession became increasingly widespread, putting a damper on consumer confidence in Italy. Despite the difficult market environment, the German manufacturers maintained their market share of almost 35 percent.
In Spain, registrations of new passenger cars totaled 1.2 million units in 2008, a 28-percent decline from the figure posted in the previous year. Demand was severely hampered by high unemployment as a result of the country's rapid economic slowdown as well as by the negative effects of the real estate crisis particularly on the construction industry. While private demand for passenger vehicles was down 33 percent, sales of company cars and rental vehicles dropped by 26 percent and 13 percent, respectively. As a result, the share of purchases by private consumers decreased to 55 percent.
The new EU member states recorded about 1.2 million new passenger vehicle registrations in 2008, or almost 1 percent fewer than in the previous year. After a dynamic start into the new year, demand increasingly began to falter in the second half of 2008. In addition to the financial crisis, which led to a weakening of the real economy, the sales drop was primarily caused by the widespread increase in inflation, which made the purchase of a car considerably more expensive. The economic slowdown in Western Europe also caused exports by the new EU member states to decline markedly. In addition, with the introduction of the euro currency approaching, the governments of some of the countries are significantly reducing their budget expenditures. Market developments varied widely in the different countries: Whereas demand rose in Poland (+9 percent) and the Czech Republic (+8 percent), it declined sharply in Romania and Hungary (-9 percent in both countries).