EU auto sales slide 8% in June
on July 19, 2011

EU autos Jul11.pngThe auto industry is a major source of global chemical demand.
Today, at the half-year point, the blog begins a 3-part series analysing auto sales trends in Europe (today), China (tomorrow) and total EU, China and USA sales (Thursday). Click here for current USA analysis.
For the past few months, Europe has seen a two-tier market develop. A few markets were very strong – Germany and the Netherlands, for example. But most were weak. Overall, volumes were therefore stable.
June, however, marks a potentially decisive break with this pattern. As ACEA (the European Automobile Manufacturers Association) comment:
“All important markets faced a downturn, leading to an overall 8.1% fall across the EU. Contractions ranged from -0.3% in Germany to -1.7% in Italy, -6.2% in the UK, -12.6% in France and -31.4% in Spain.”
The severity of the downturn is shown in the above chart. June’s sales (red square) were the lowest in the 2005-11 period. And a quick recovery is unlikely, as July and August are seasonally weak due to holidays.
The key question is whether demand will recover in September? Sadly, this is not guaranteed, given the depth of the Eurozone debt crisis.
Equally worrying, as the blog will discuss tomorrow, is that China also seems to have slowed.

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Comments
  • Anne Sasso
    July 19, 2011

    Hi Paul,
    It’s interesting that there’s such seasonality to auto buying. Do you know why it consistently spikes in March, June and September?
    And despite overall lower numbers throughout 2011, it doesn’t really seem like we’re seeing an impact from the Japan disaster, at least on the European buying patterns. Are you seeing one at all?
    Economists, especially here in the states, keep telling us that the economy will pick up in H2 and seem to expect a rebound in car purchases that will help drive the recovery. High gas prices and the Japanese disaster were blamed for the slowdown earlier in the year. Now that gas prices have backed off somewhat and the flow of car components out of Japan is normalizing again, they seem to expect some kind of pent-up demand. I’m not so sure the demand is there, especially with the recent jobs, retail sales and consumer sentiment data.
    It will be interesting to see the September numbers when they come.
    Best,
    Anne

  • Paul Hodges
    July 20, 2011

    Hi Anne
    My own thought on the seasonality is that it seems to come at quarter-end. So potentially it may be due to manufacturers/dealers increasing discounts or otherwise boosting volumes to hit targets? March and September makes sense separately, as the weather might restrict sales in Janaury/February, and Europe is on holiday in July/August. But April/May have no reason to be particuarly slow.
    My sense on the Japanese disaster is that it probably impacted Asia and the USA more than Europe. The US strength in March seems likely to have been due to consumers realising that prices were likely to rise in Q2, as Japan problems reduced supply.
    I’m very doubtful about the ‘soft patch’ theory. There was a bit of a bounce in Q1 when the payroll tax cut came in, but I just can’t see the economy recovering with the jobless total high and rising. Any deal on debt reduction, though essential, will cut more jobs, after all.
    This isn’t the Reagan era, although we might wish it was, with lots of Boomers coming into the jobs market for the first time, and setting up home etc. So there is no pent-up demand waiting to come through.
    Paul

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