Europe’s ACEA, the Association des Constructeurs Européens d’Automobiles, better known as the European Automobile Manufacturers Association, has finally gotten around to tallying new car sales in Europe for the month of January. Europe as defined by the ACEA consists of the EU states, plus the three EFTA holdouts, Iceland, Norway and Switzerland.
First, the good news: January new passenger car registrations in Europe increased by 12.9 percent. With the exception of Germany (-4.3 percent,) the larger markets are all sputtering along nicely: France (+14.3 percent), Spain (+18.1 percent), the UK (+29.8 percent) and Italy (+30.2 percent). In total, 1,058,868 new cars were registered in Europe.
On the market share front, the Volkswagen Group maintains to be the king of the European hill with a 20.6 percent share. Next up are PSA (14 percent) and Renault (10.7 percent). The French are getting frisky: Renault added an impressive 3.1 percent to its January market share, PSA 0.6 percent. Now for the bad news:
As we are comparing with carmageddon numbers, anything better than absolutely awful will look like growth. The graph on the side is testament to that. In January 2009, European car sales had come to a practical standstill. Compared to January 2009, European car sales may be up by 12.9 percent. Compared to January 2008, registrations are down by 17.3 percent.
Next observation: The absolutely horrendous January 2009 numbers prompted most Western European governments to inject massive amounts of amphetamines in the market, in the form of cash for clunker money. These programs had varying vigor and effect, some came sooner, some later. Some have been withdrawn. Some are being phased out. Anyway, the syringes of the states prodded Europe back into plus territory in mid summer. Sales culminated in a growth of 26.9 percent in November last year. (Careful, November 2009 already compared with a post-Lehmann November 2008.)
The fleet renewal programs being withdrawn out all over Europe, the Old Country is falling back into the new normal. You will most likely see another percentage growth in February, which compares to a February 2009 that was as scary as January 2009. Beginning in late spring, you will see headlines announcing that the sky is falling in Europe. By that time, we will compare with numbers that would never had survived doping probes if this would be popular sport. The summer 2009 numbers in most of Europe were high as the proverbial kites, driven up by “Abwrackprämien,” “cash for bangers,” “Verschrottungsprämien” or whatever the drug was called in the respective country. You will see headlines announcing double digit declines. Ignore them, like you should ignore the pleadings of a junkie that goes through detox.
No matter what you will read, the sky will not come down – at least not all the way. The market will simply settle into its new normal, especially when the pull forward effects of the scrapping schemes have been digested.
One indication of what the new normal may be: In a separate report, ACEA says that between January and September 2009, automotive production in Europe has decreased by 26 percent compared to pre-crisis levels in 2008 and 2007. That capacity is sitting idle and something (we are looking at you, Opel) must go. And if all else fails, look for Abwrackprämie II.
One more thing: In Europe, the median age of a new car buyer is somewhere between 40 and 60, depending on car and country. There is a bulge of that age group that drove European car sales at the beginning of the new millennium, and that fuelled the drive to more upscale models as buyers get older and more affluent. This bulge is slowly heading towards retirement. Blame it on the pill, but birth rates often halved in European countries when 1970 came around. The babies that weren’t made back when are now sorely missed in the showrooms. Most likely, if we look back in a few years, we’ll see that Europe’s new car sales have peaked in 2007.
Note: The reports can be downloaded as PDF, or as an Excel file. The Excel file contains manufacturer data. Also, beginning in 2010, the ACEA is no longer reporting the Western and Eastern EU countries separately, but lists them as one happy (more or less) family. Which reminds me of the years after Germany’s reunification. The formerly East German states were referred to as the “new states.” People in the East retaliated and called the former West Germany the “used states.”