Europe’s Auto Industry is On the Rise

According to recent studies, new car sales within the European Union leaped ahead around 14% just in February. This is thought to be helped in party by the extra sales day made possible by the leap year, though some auto executives have been quick to caution that full-year growth may be a bit more modest, despite the fact that volumes seem to be headed back to precrisis levels.

car dealershipLast moth’s 14 percent boost build on a general growth of almost 10 percent in 2015 throughout the European Union. That said, the EU remains well below the annual highs reached before and around 2007, before the economic crisis hit. Also, it’s worth nothing that China and the U.S., which boast the world’s two largest car markets, have continued to grow this year as well, though not at rates that quite match that of Europe.

Some countries are also fairing better than others. Italy’s sales are up 27 percent and led double-digit gains in Europe’s biggest auto markets including that of France, Germany, and Spain. Market growth in the United Kingdom was remarkable if not as dramatic as some of its neighbors; it clocked in at somewhere around an 8.4 percent growth. All European countries underwent some kind of auto market growth with the exception of the Netherlands and Greece.

The continued auto market growth of Germany despite the enormous recalls that have occurred as a result of the VW scandal is somewhat surprising.

Although these surges are promising, it’s important to note that Italy closed out last year still about 40 percent below its 2007 levels. The way that the financial crisis curtailed consumer spending across southern Europe has been slowly ameliorating, but complete recovery remains a far-off goal for most European countries. Spain has 60 percent of its market to make up, while France is doing significantly better and is only about 7 percent behind its 2007 market levels. Combined, Italy Spain and France closed 2015 with 2 million in vehicle sales less than their precrisis highs, and Italy accounted for about half of that.

peugoetThis is why most auto executives are expecting a more modest advance of about 2 or 3 percent throughout the year despite the European market’s exciting showing in February and 10 percent growth in the first two months of the year. Despite the gains that have been made over the past two years, volumes of new cars registered in Europe closed 2015 about 12 percent below the peak that was reached in 2007, a sign seen as more indicative of the car buying trends within Europe than the potential fluke of these first two months.

“In 2016, we foresee a 3% increase in the car market but we must not forget that the crisis caused a loss of 3 million [in car sales],” stated Alfredo Altavilla, Fiat Chrysler Automobiles NV’s Chief Operating Officer for Europe, the Middle East and Africa in an email.

Other analysts are even more caution. IHS Automotive, for example, predicts that sales will only grow around 1.4% this year in Western Europe. That accounts for nearly 90 percent of the EU’s total volume. Even at a much more optimistic 3 percent growth (which is forecast by most execs), Europe remains about five years away from reaching its precrisis levels.

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