Car sales in Europe back in green in surprise first gain of the year

Europe’s car sales are still down 29% for the year through September. After deliveries cratered in March and April, automakers pared declines the following three months, then suffered a setback in August.
By : Bloomberg
| Updated on: 16 Oct 2020, 12:22 PM
File photo of the production line at Seat, a unit of Volkswagen AG. (Bloomberg)
File photo of the production line at Seat, a unit of Volkswagen AG. (Bloomberg)
File photo of the production line at Seat, a unit of Volkswagen AG. (Bloomberg)
File photo of the production line at Seat, a unit of Volkswagen AG.

Automakers eked out a surprise sales increase last month in Europe, the first advance this year for a region still struggling with a patchy recovery reliant on government subsidies.

New-car registrations rose 1.1% in September, the European Automobile Manufacturers Association said Friday. Sales gained in Italy and Germany -- two of the major countries offering incentives to support electric-vehicle purchases -- and offset still-slumping demand in Spain and France.

Keeping the momentum going in the last few months of the year will be a challenge. Leaders in the UK, Germany, Italy and France are struggling to cope with record new Covid-19 cases. Targeted strategies to slow the spread of the disease are being used for now before resorting to the kind of broad national lockdowns that decimated car sales earlier this year.

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“We’d argue consumers don’t share automakers’ revival hopes," Michael Dean, a Bloomberg Intelligence analyst, said in a note ahead of the industry’s sales report. He expects annual deliveries to decline at least 20% and sees risk that the drop will be worse because of coronavirus-related restriction measures.

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Europe’s car sales are still down 29% for the year through September. After deliveries cratered in March and April, automakers pared declines the following three months, then suffered a setback in August.

Germany’s car market expanded last month for the first time this year, as subsidies for battery-powered vehicles more than quadrupled sales of plug-in hybrid and battery-electric models. But while total registrations rose 8.4% there, Spain saw a 13% drop despite also offering incentives toward EVs.

Western Europe was the worst-performing region this year through August for Volkswagen AG, the top-selling automaker both in the region and globally. Still, with a recovery on solid footing in China, Chief Executive Officer Herbert Diess said VW’s monthly orders and deliveries were up as September came to a close. He sees the positive trend continuing into the fourth quarter.

“It needs to be seen how much of the currently strong sales momentum is pent-up demand, how much is cyclical and what’s related to ‘the reincarnation of the car,’" Arndt Ellinghorst, Sanford C Bernstein & Co.’s European auto analyst, wrote in an October 1 report. He predicted recovering deliveries, low inventories and strong pricing will drive “remarkable near-term earnings momentum" for BMW AG and Daimler AG, with VW also benefiting.

First Published Date: 16 Oct 2020, 12:22 PM IST
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