Europe’s 2-speed auto market

EU autos Apr11.pngEU 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.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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