Downturn is flattening — Many markets buoyed by government measures — Strong growth in China
Global Automotive Market Remains Weak
Frankfurt am Main, June 16, 2009 Global passenger car sales in May revealed very mixed results: While the Chinese market increased by over 50 percent, the U.S. market contracted by more than one third. The market in Western Europe (sales down 3 percent to 1.2 million passenger cars) is obviously being propped up by the effects of government incentives in Germany (sales up 40 percent) and France (sales up 12 percent). Outside of France and Germany, however, new vehicle registrations in Western Europe fell by 22 percent compared to May 2008.
Apart from a few isolated exceptions, the markets of the new EU member states remain weak, with sales down by 26 percent. The global sales crisis in the automotive industry is far from over, although we are seeing the first signs that the downturn is flattening. In Europe as a whole, new vehicle registrations amounted to just under 1.3 million units, a 5 percent drop compared to the same month last year. During the year to date, however, new vehicle registrations were down 14 percent. When adjusted for seasonal effects, the market in Western Europe grew by 2 percent compared to the previous month.
In Western Europe, the most drastic declines in demand were in Spain (down 39 percent) and the UK (down 25 percent), where measures to stimulate demand for passenger vehicles were only introduced a few weeks ago and results are not yet reflected in the sales figures. In Italy new vehicle registrations in May were down by almost 9 percent compared to the previous year. In the new EU member countries, registrations of new vehicles dropped by nearly one-quarter in May. Demand for passenger vehicles fell particularly sharply in Romania (down 53 percent) and Hungary (down 66 percent), while the Czech Republic posted an increase of nearly 21 percent compared to the previous year. Sales of passenger cars also increased in Slovakia, rising by 44 percent. Demand in Poland, however, fell slightly by 3 percent in May, after rising in the previous months.
In Russia the continuing difficult overall economic situation led to a further decline in demand. Last month new vehicle registrations on the Russian automotive market plummeted by more than 57 percent to approximately 119,400 vehicles. Demand is impacted here particularly by very high interest rates that continue to be in effect for new car loans. A considerable expansion of state-subsidized loans, as called for by the Russian Automobile Association - from the current 350,000 to 600,000 rubles (about €13,800) - could help to reduce this burden.
The U.S. market has contracted by 37 percent during the year to date. In May sales of light vehicles decreased by nearly 34 percent to 923,300 units. The German brands succeeded in expanding their market share by more than one percentage point to 7.3 percent during the year to date, and their sales in the light trucks segment were even up two percent. The U.S. government is currently considering introduction of a scrapping program ("cash for clunkers"), whereby car buyers receive vouchers for an amount determined on the basis of the difference in fuel mileage between the old car and the new vehicle. This is expected to boost demand. The U.S. House of Representatives have already approved the bill, which only leaves the Senate to decide whether or not to approve the approximately $4 billion package. The VDA has requested that the measure not incorporate any form of protectionism. Like Germany's environmental bonus, it should not include any open or hidden barriers or price limits for imported new vehicles, as is currently the case, because this would put German premium models in particular at a disadvantage.
The Brazilian market also benefited over the last few months from the introduction of a scrapping program. In May new vehicle registrations rose by 3 percent to nearly 237,400 units. This marks a slight increase in new registrations (nearly 1 percent) to over 1.1 million light vehicles during the year to date.
The Japanese market remains weak in comparison, however, shrinking by 17 percent in the month of May to 244,600 passenger cars. During the year to date, sales have decreased by over one-fifth (22 percent) compared to the same period last year.
At 140,800 passenger cars, sales in India fell only slightly in May (down 1 percent) compared to the previous year. Since the beginning of 2009, new vehicle registrations increased by almost 2 percent compared to the same period last year.
China recorded a surprising increase in new passenger car registrations in May. Due to the government economic stimulus program and a dramatic lowering of the sales tax on passenger cars with less than 1.6 liters displacement, a total of 728,300 passenger cars were sold in China last month - an increase of almost 55 percent compared to the same month last year. The positive development in demand last month contributed to a rise of 18 percent in passenger car sales since the beginning of the year, to nearly 3 million units.
