EU auto sales are a critical market for chemical companies. So far, 2011 volumes have been stable, down just 2% in Q1 versus 2010. But the trend seems to be weakening, with March volumes at 1.6m down 5% (red line), as shown in the above chart based on ACEA data.
The key worry is the continuing divergence between the major markets. Normally, the 'Big 5' move together. But many countries are facing major debt problems. This is causing their populations to become much more cautious about making 'big ticket' purchases such as autos:
• Germany was the largest market in Q1, with 763k sales, up 14%
• France was also strong, with Q1 sales of 647k up 9%
• But the UK was down 9% with 558k sales
• And Italian sales fell 23% to 513k, whilst Spain was down 27% at 208k
Outside the 'Big 5', the Netherlands (up 25% to 181k), and Belgium (up 5% to 169k), were the main support for sales.
There seems little chance of any quick solution to the European debt crisis now impacting Spain, Portugal, Ireland and Greece. So the question is whether Germany, France, Netherlands and Belgium can continue at present levels. There are also growing concerns that component supply problems ex-Japan could have an increasing impact as time goes on.