The world's 3 major auto markets - USA, Europe and China - currently account for ~70% of global sales. And as the chart above shows, H1 performance has been volatile over the 2005-11 period:
• 2005 was the last year of the US subprime boom, and the US (red) was easily the largest market with 8.6m sales. H1 sales this year were down 15% at 7.6m
• Europe (green) was the 2nd largest market in 2005, with sales of 7.6m. This year, sales were down 13% at 6.6m
• China's growth (blue) rescued overall sales volumes. It sold just 1.8m in 2005, but volumes rose 280% to 7m this year
• Overall, therefore sales in H1 2012 were up 16% versus 2005, at 20.9m versus 18m
US sales continue to make modest progress. 7 years is a long time to keep a new car, and so the high volumes of 2005 have led to strong replacement buying since 2010. And Japan's tragedy last year created a tight market until recently, further encouraging price-sensitive consumers to believe there was no point in waiting for major bargains to appear.
Europe is the key problem area. 2010-11 saw marginal improvement in a declining trend, due to the stimulus programmes. But 2012 has seen a 7% decline versus 2011. Only Germany and the UK of the major markets are showing increased sales - Germany due to export strength, and the UK to homeowners seeing record low mortgage interest rates.
China is the major question mark. Sales leapt from 4.5m in 2009 to 6.7m in 2010, due to the government's lending and stimulus policies. But since then they have plateaued at ~7m. China counts factory shipments as retail sales. And worryingly, the national dealer association claims its inventories have jumped from 45 days in April to 2 months in June.
They also note that more cities are starting to restrict car sales. Beijing, Shanghai, Guangzhou and Guiyang have introduced limits, due to the road congestion problems created by the sudden increase in sales. Guangzhou will now allow only 10k new cars each month on the roads.
Equally, Audi's result underline the dependence of the luxury segment on China. It sold 193k cars in H1, due to its position as the favoured car of communist party chiefs. This was 50% of its global sales.