Abu Dhabi, UAEMonday 9 December 2019

European car sales plummet in June

Sales dropped 7.9 per cent to 1.49 million cars, the worst monthly decline since December

Daimler factory in Rastatt, Germany. Sales of vehicles across Europe tumbled last month. Reuters
Daimler factory in Rastatt, Germany. Sales of vehicles across Europe tumbled last month. Reuters

European car registrations fell sharply in June, resuming a downward spiral this year that has seen profit warnings at German manufacturer Daimler and a quarterly automotive division loss at rival BMW.

Sales dropped 7.9 per cent to 1.49 million cars, the European Automobile Manufacturers’ Association said Wednesday, the worst monthly decline since December. France and Spain had falls of more than 8 per cent, while German and UK sales fell 4.7 per cent and 4.9 per cent, respectively.

While the industry group blamed the June drop on fewer working days during the month, the weak showing adds to the gloom enveloping the sector and brings the fall to 3.1 per cent since the start of 2019. Daimler last week issued its fourth profit warning in just over a year due to the costs of a recall and allegations of emissions-tampering in diesel cars. The car maker also blamed weaker global markets. BMW in May reported its first loss in a decade in the main automotive division.

At the year’s half-way mark, Europe is likely facing a second annual decline in car sales. The industry association has already revised its prediction for the year to a 1 per cent drop, blaming uncertainty surrounding Brexit and flattening demand. It had previously forecast a 1 per cent rise. Before last year, the industry had enjoyed uninterrupted annual growth since 2013.

“We’re standing in front of a difficult second half of the year,” said Peter Fuss, a partner at EY consultancy. “Little positive impetus for the new car market in the EU can be expected in the coming months.”

In addition to weakening markets, a truce in the US-China trade spat remains delicate. Tensions between the two nations have hurt China’s economy, prompting car sales to slump, and have hurt the export of US-made cars from BMW and Mercedes-Benz.

French car maker Renault was more optimistic on Tuesday, saying it expects European vehicle sales to remain stable this year, barring a hard Brexit. While the French carmaker expects some recovery in volumes during the rest of 2019 thanks to new models, it sees the global car market shrinking by around 3 per cent.

Renault’s partner Nissan Motor was the worst hit during the first six months of this year, registering a 24 per cent drop in European sales. Honda sales fell 15.4 per cent and Fiat-Chrysler saw a 9.5 per cent decline.

In May, European car sales rose 0.1 per cent, an unexpected and slight reprieve in a nine-month run of lower sales. The market benefited from trade-in incentives for older diesel cars and two additional shopping days that month.

The possibility that the car market has passed a peak would come at a particularly unfavorable time for manufacturers, who are scrambling to pay for an unprecedented shift to electric and autonomous vehicles. Battery-powered car sales are still a fraction of the total, something that could change as tough emissions regulations come into effect next year.

Updated: July 17, 2019 12:08 PM