Wednesday, November 20, 2013

European Car Registrations In October

The automotive industry in Europe is rebounding. According to ACEA, the  registrations of new cars in the EU were 4.7 percent higher in October 2013 than a year earlier, reducing the gap to last years' sales over the first 10 months to "only" 3.1 percent (down from 6.6 percent for the first 6 months of the year). But make no mistake this was still the second worst October since 2003; and some of the improvement is due to very high rebates.

Overall, almost 1,005,000 new cars were registered in October and the sales in both Spain (+34.4 percent yoy) and Portugal (+22.8 percent yoy) looked very promising again. Italy is the only major market that was still declining.Both Germany (+2.3 percent) and France ( 2.6 percent) managed small improvements, but for the whole year the sales will most likely be below 2012 levels.

I have argued last month that the third quarter marked the turnaround for the automotive industry in Europe; and showed that some car manufacturers were affected much more than others. Especially those firms (PSA,FIAT) that primarily produce for the European market were hit the hardest. And those two firms are still experiencing declining sales figures. FIAT Group registrations were again down 7.3 percent in October.The following graph shows how the European sales of the major car manufactuerers were affected by the crisis:

According to a new study by the Car Institute, FIAT is also losing €165 on every single car sale of their core brand. It is one of four companies that make an operating loss. The others are again Ford Europe (€756) and Opel/Vauxhall(€487). 

There is one more: the Spanish SEAT lost €278 on every sale; but unlike the other three the VW subsidiary was able to increase its market share significantly. It is also the only major brand of the Volkswagen Group that did not achieve an operating profit. Is this a sign of the partly state owned German giant conducting economic policy by propping up Spanish exports and accepting a small loss for one of its smaller subsidiaries?

One thing is clear the overall turnaround in Europe is partly due to an ongoing "rebate battle". The CAR Institutes "CAR-Rabatt-Index" ("rebate index" for Germany) reached the highest ever level in September. So we are clearly not out of the woods, yet. Also, the situation in Italy which of course also affects its only major car producer (FIAT Group) remains worrying.

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