Worldwide Passenger Car Sales Decline Sharply
Government measures to support sales - decline in Germany comparatively moderate
Frankfurt am Main, 12 February 2009. The consequences of the international financial and economic crisis had a very adverse effect on worldwide passenger car sales in January 2009. This result was expected, given the fact that concerned consumers are very reluctant to make purchases. The decline in demand is expected to continue in the coming months. If the economic stimulus programs already introduced in many countries, and the many government measures to stimulate demand for new cars, can take hold and unfold their full potential - as we are currently seeing on the German market - a gradual recovery in worldwide sales probably can be expected in the second half of the year, according to the German Association of the Automotive Industry (VDA).
In Europe, passenger car sales amounted to 958,500 vehicles in January, a decline of more than one fourth (-27 percent) compared to the result recorded in January 2008. In Western Europe, passenger car sales fell by nearly 27 percent to 891,500 units. While Germany (-14 percent), France (-8 percent) and the Benelux countries (-16 percent) managed to forestall the economic downturn with comparatively moderate losses, Spain (-42 percent), Italy (-33 percent) and the UK (-31 percent) recorded steep declines in sales. In the new EU countries, demand fell by one third in comparison to the same month in 2008 - in Romania alone, passenger car sales decreased by 50 percent.
To alleviate the dramatic crisis in sales, nearly all countries in Europe have introduced government measures. Accordingly, the UK is granting credit guarantees for the automotive industry, as well as a temporary reduction of sales tax. In Spain, buyers of new cars will receive state-supported loans, and requirements for being eligible to receive a bonus for scrapping older vehicles have been relaxed. In Italy, the bonus that was discontinued last year is to be reintroduced.
France aims to support its national automotive industry with very extensive measures: French passenger car manufacturers are to receive €6 billion in reduced loans for development of cars with low CO2 emissions; the financial assistance for buying a car - which will benefit only French brands - will be doubled to €2 billion. An additional €1 billion will be available for more loans for French suppliers. The fund to strengthen the suppliers' equity will be doubled to €600 million.
In addition, €250 million is to be used as a "disposal bonus." In return, the manufacturers must agree not to close any plants in France in the next five years, not to relocate any production abroad or lay off employees, and to mainly purchase from French suppliers. The EU commission has already voiced serious concerns over this attempt to distort competition with support that would benefit only French companies, and it will reassess the compatibility of these measures with EU law.
Outside of Europe, sales of passenger cars at the beginning of this year also decreased significantly. In the U.S. there was a 37 percent decline in car sales in January. Sales in Japan totaled 256,100 vehicles, a decline of 20 percent compared to the same month in 2008. Sales in the segment of cars with more than two liters of engine displacement were hit especially hard (-36 percent).
The worldwide economic crisis is also weakening demand in the emerging markets. In India, 137,300 vehicles were sold in January, a 7 percent decrease in passenger car sales. In view of the slowdown in economic growth and the difficult situation in the credit market, the Indian government has decided to reduce sales tax. In addition, the Central Bank of India has eased the prime interest rate. Through these measures, a stronger decline in sales could be avoided.
According to preliminary reports, sales of passenger cars at the beginning of the year in China were down 8 percent from the mark reached in the same period in 2008. To increase sales of passenger cars, the government has reduced by half the sales tax on vehicles with engine displacement of less than 1.6 liters, a measure that is to remain in effect until the end of 2009. Facing a considerable slowdown in overall economic growth, Beijing is considering further economic incentive measures.
Sales of passenger cars in Brazil totaled 189,700 units in January, a decrease of 8 percent. Higher financing costs and the economic slowdown were the main causes of the decline in sales. Alternative drive systems are still playing a dominant role in Brazil, where 86 percent of cars sold at the beginning of the year were equipped with a flex-fuel drive, which can run on gasoline or ethanol - in any desired combination.
