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Mixed sales fortunes for European car producers

New car sales figures showing falls across Western Europe add weight to a report that suggests manufacturers will have to make severe cutbacks over the next three years when sales recover. Mike Roberts reports Latest industry figures show new cars sales in Western Europe fell during the first half of this year.

Only four out of 18 countries in Western Europe noted an increase in sales compared to the same period last year, with France enjoying the strongest increase of almost 7% from 1,127,711 cars sold between January and June last year and 1,204,411 units this year.

However, in France the fortunes of domestic manufacturers were mixed, with Peugeot and Citroen increasing sales in the first six months of the year but Renault losing them.

Renault said it was in a period of transition in its product range but was still the leading brand in France with 28% of the market. It said it expected sales to increase with new product launches including the Laguna II and new Clio and the forthcoming new Kangoo Trakka, the Avantime and new Trafic van.

Other European countries where sales increased are Spain, up 1.4%, Switzerland (0.3%) and the United Kingdom (4.3%). In the important market of Germany sales fell by 2.8% from 1,813,639 units to 1,762,754 units.

However, figures showing sales on a manufacturer by manufacturer basis show German-based car makers increasing sales across the whole of Europe.

For example, Audi's sales increased by 5.9% to 284,062 units from 268,250, BMW's sales rose 4.2% to 283,136 units from 271,788 and Mercedes-Benz sold 387,017 units from January to June, compared with 370,843 during the same period last year.

German automotive industry association VDA said: 'During the first six months of 2001 German car makers exported more than 1.9 million passenger cars. This equated to an increase of 138,000 units, or 8%, compared to the same period last year.'

It added that although domestic orders had fallen during the same period, demand did recover in June. Figures comparing June this year to the same month last year show sales in Germany increased by 3.5% to 303,000 from 292,878.

ACEA said it represented 'good signs of recovery'.

The biggest fall in sales in the European Union, according to figures released by the European Automobile Manufacturers' Association (ACEA), was in Ireland, where sales dropped by 27.9%, with the foot and mouth epidemic that rocked the economy taking a large proportion of blame for this.

This is a major contrast to last year's total sales figures announced for Ireland at the beginning of this year which showed it achieved the largest percentage increase of sales in 2000 at 32.4%.

Other large falls for the first six months of this year were noted in Finland, down by 22.7%, The Netherlands (15.9%) and Iceland, where sales fell 42.9%.

No recovery until 2003 A new forecast into the European car market suggests that some manufacturers could be forced to make 'substantial cutbacks' in a bid to offset falling sales.

Industry strategy consultant autopolis said that although Europe's car market is declining in a 'typical' way, suggesting the slowing follows a 30-year pattern, the impact could be 'stunning'.

'Overall, the market will drop for three years consecutively, starting in 2000,' the forecast said. 'There won't be any recovery until 2003.

'That may be bad enough, but three years of decline will throw 1.7 million cars from the annual market. That's 11% in total,' it added.

While it describes the drop as 'manageable' since it won't happen suddenly, autopolis adds that 'this will still make life hard for Europe's car makers'. The prospects for car sales in North America and much of Asia are even worse, it added.

'The drop in car sales in Europe, combined with low levels of profitability and excess capacity will mean cutbacks,' said autopolis economist Graeme Maxton.

And, given the gloomy prospects elsewhere, he added, 'some of these could be substantial.'

Commenting on manufacturers' individual performances, the report states: 'Competitively, six manufacturers account for 75% of Europe's car market. The top producer is Volkswagen - and it is likely to remain top.'

It said Renault's merger with Nissan has propelled the company to second place and it is expected to move even further ahead of French rival PSA in the coming years.

'Then come Ford, GM and Fiat, although each is vulnerable,' the forecast said. 'All are suffering disproportionately from the slowdown already and will have to cut costs further.'

For the remaining manufacturers, the prospects are mixed, says autopolis. 'Struggling DaimlerChrysler, with just 6% of the region's car sales, risks being neither big enough to achieve economies of scale nor small enough to maintain a defensible niche.

'Similarly, BMW, Honda, MG Rover and South Korean firm Daewoo,' which, the forecasts claims, is already on the brink 'will find their small pieces of the market hard to maintain.' (July/August 2001)

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