Geneva Motor Show: Europe’s car industry in optimistic mood
Europe’s premier motor show revs its engines this week, so expect the usual swagger from an industry that knows all about marketing hype.
Perhaps there is more cause for celebration than usual at this year’s Geneva Motor Show, given that recent data has pointed to a mild recovery in European sales.
But drill deeper into the figures, and there is still concern about whether the increase is sustainable.
“People are slightly more positive because things are not getting any worse,” says Carlos Da Silva, Paris-based analyst at IHS Automotive.
“After a period where survival became the key word for many players in the industry, we are finally entering the revival phase,” he says. “But it’s still weak.”
Is this an overly pessimistic view? Latest figures from the European Automobile Manufacturers’ Association might suggest so.
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“The question is how much of that recovery is organic and how much is the result of actions taken by governments and carmakers”
End Quote Allan Rushforth Hyundai Europe
Car sales in the European Union have risen for five consecutive months.
Europe’s five biggest markets have all posted sales-gains recently, as have the crisis-hit economies of Greece, Portugal, Spain and Ireland.
Even Italy has improved, registering in December and January its first back-to-back monthly rises in four years.
And the growth appears to be across the model range, from premium brand Audi, to low-cost Dacia, to that mainstay of the showroom, the Ford Fiesta.
It is undoubtedly better news for an industry that slumped deep into recession. But it should not be forgotten that this sales increase comes off a very low base.
Last year, European sales shrank 1.7% to 11.85 million vehicles, the worst since 1995 and some distance from the pre-crisis high of 14.79 million.
Many people wonder if the recent improvement owes less to economic fundamentals and more to artificial support.
The question,” says Allan Rushforth, chief operating officer at Hyundai Europe, “is how much of that recovery is organic and how much is the result of actions taken by governments and carmakers?”
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“You don’t need a car to go to the shopping mall, because in today’s world the shopping mall can come to you”
End Quote Carlos Da Silva IHS Automotive
Some manufacturers have been able to sustain market share only by huge discounting. It is not a strategy that Hyundai is pursuing – and consequently its sales have fallen.
But it means Hyundai is “laying the foundations of qualitative growth”, he says. Can the company’s European rivals make the same claim?
The German trade magazine Autohaus PulsSchlag tracks discounting in car showrooms, and says that most major manufacturers have been offering price cuts of at least 10%.
In Germany, Europe’s biggest market, discounts are running at about 11% on average, although that is the lowest for two years.
Government-backed car scrappage schemes have been successful in bolstering sales, especially in Spain. But such schemes are not a long-term solution.
Even in the UK, where car sales in 2013 were the strongest since 2007, there are worries that this is a one-off surge spurred by cheap credit and huge windfalls due to banks repaying money from mis-sold insurance protection.
Source: BBC news
In: Connectivity & Automation