EU auto sales slide for 4th year in a row

Consumer demand

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EU autos Jan14Final data for EU auto sales has now been published, and is summarised in the chart above:

  • Sales fell for the 4th year in a row in 2013 (red square) to 11.8 million
  • This was a 2% fall versus 2012 (green line) and a cumulative 18% fall versus 2007’s peak
  • Only 2 countries, the UK and Spain, saw sales increase over the year
  • The other 3 major markets of Germany, France and Italy saw further declines

The 3% increase in Spain was due to yet another ‘cash-for-clunkers’ programme by the government.  Desperate to boost consumer spending and revive manufacturing, they are offering €1k ($1.3k) for every 7 – 10 year-old car that is scrapped and replaced by a new car costing less than €25k.

The reasons for the UK’s 11% increase were more complex:

  • Consumers have received a £14bn windfall ($23bn) since 2011 from claims for mis-selling of insurance policies
  • A large number of claimants have used the money as a down payment for a new car, or to fund the total price
  • Payments have averaged nearly £500m per month since the end of 2011
  • 2013 has seen £5.5bn of payments, which provided major support for car sales and consumer spending

As a result, the UK is now the 2nd largest EU market, with sales at 2.3m versus Germany’s 3m.  Back in 2009-10, UK sales were 300k lower at 2m.

Clearly these extra sales are a one-off event.  They will also presumably lead to lower sales in the future when the claims payments cease, as by then most adults will have replaced their old car with a new one.  And at the moment, it is hard to see what might happen in the rest of Europe to balance these lower UK sales.

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