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Cars for import and export in the free harbour in Bremerhaven, Germany. A no-deal Brexit could reduce demand by as much as 15% in Europe’s second-largest market, according to LMC.
Cars for import and export in the free harbour in Bremerhaven, Germany. A no-deal Brexit could reduce demand by as much as 15% in Europe’s second-largest market, according to LMC.

European car-sales jump masks gloomy outlook blighted by economy

Registrations increased by 14% to 1.29 million vehicles, the European Automobile Manufacturers Association said on Wednesday. Sales suffered in the year-ago period after new emissions-test rules took effect.

European car sales rose sharply in September, but the jump had more to do with the year-ago comparison than any respite from longer-term woes in the industry.

Registrations increased by 14% to 1.29 million vehicles, the European Automobile Manufacturers Association said on Wednesday. Sales suffered in the year-ago period after new emissions-test rules took effect.

Carmakers are battling a slowing European economy, where biggest market Germany is at risk of sliding into a recession and UK buyers await the outcome of ongoing Brexit talks. September sales in both countries were "disappointing," forecaster LMC Automotive said in a report, with the U.K. rising by just 1.3%.

A no-deal Brexit could reduce demand by as much as 15% in Europe's second-largest market, according to LMC.

Euro-area economic growth is forecast to slow to 1.1% this year from 1.9% in 2018, which would be its worst performance in six years. Car demand on the continent has declined 1.6% this year through September to 12.1 million vehicles.

Globally, the picture isn't any better. Chinese auto sales fell in September for the 15th month in 16, the China Passenger Car Association said on Saturday.

Alongside the economic fallout from trade tensions between the US and China, carmakers are feeling the pinch from the shift to electric cars. From 2020, new European Union regulations on carbon-dioxide emissions will force the industry to step up sales of electrified vehicles with much lower returns than combustion-engine vehicles, or face fines.

A second round of emission-testing regulation took hold on Sept. 1, contributing to a weaker-than-expected rise in registrations, LMC said. Carmakers were able to sell some vehicles tested under the old regime until that date, leading to some sales being pulled forward into August.

"We saw a small pull-forward effect into August that caused a bit of weakness in September," said Pete Kelly, managing director at LMC, which expects demand in Europe to be flat next year. "The U.K. market continues to be suppressed by Brexit."

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