Reuters, DPA/Milan

 

European car sales slumped to their lowest six-month total in 20 years in the first half of 2013, with a 6.3% drop in June suggesting no let up for an industry battered by overcapacity and weak demand.

European auto makers have been suffering for months from the effects of record unemployment and government austerity measures in the eurozone, with some such as Peugeot seeking to close factories and lay off workers to counter heavy losses.

Leading the downturn in June were sharp falls in four of the region’s biggest car markets in Germany, France, Italy, and Spain. However, Britain bucked the trend, posting a 13.4% gain.

Italy’s Fiat saw the biggest drop in sales among major manufacturers last month, suffering a 13.6% slide, followed by a 10.9% fall at France’s Peugeot, while Ford bucked the trend with a 6.9% rise.

“Even if there is a recovery in the second half of the year, it’s hard to see how it could be strong enough to offset the bad results we’ve registered so far this year,” said Quynh-Nhu Huynh, economics and statistics director at the Association of European Carmakers (ACEA), which compiled the figures.

BMW chief executive Norbert Reithofer warned in a newspaper interview yesterday that the European car market was facing tough times.

“Overall, the market in Western Europe will contract by about 5% this year and remains a huge challenge for car makers,” Reithofer told the financial daily Boersen-Zeitung.

Furthermore, the BMW chief said, there might not be a pickup in the market until the second half of 2014.

The EU new car markets contracted by 6.6% during the first half of the year compared with the January-June period of 2012, the ACEA said.

ACEA said car registrations in European Union countries plus those in the European Free Trade Association (EFTA) fell 6.7% in the first half year to 6,436,743, the lowest six monthly total since 1993.

Sales in June were the lowest for that month since 1996.

Nonetheless, some analysts were encouraged that sales fell at a slower pace than in many previous months.

“The market has bottomed out, for sure,” said Pierluigi Bellini, head of sales forecasts for EMEA (Europe, Middle East and Africa) at IHS Automotive. “We can’t talk about a recovery this year, but we see smaller monthly declines going forward.”

The German market, which had resisted much of last year’s slump, shrank 4.7% in June, while sales in France and Italy fell 8.4 and 5.5% respectively as unemployment and austerity measures curb consumer spending.

Ferdinando Uliano, national secretary of the Italian metalworkers’ union FIM-CISL, said high taxes and insurance costs were stifling demand and called on the government to act.

“What is the government waiting for to enact measures to support investment in this key sector?” Uliano said in a statement. Sales in Britain, in contrast, remained robust, notching up a 16th straight month of gains with a 13.4% increase.

Among luxury car makers, Mercedes posted a 2% gain, powered by new models, while the BMW brand fell 7.7% and Volkswagen’s Audi dropped 8.9%.

“We are still a long way from a dramatic market recovery,” said Peter Fuss, a partner with Ernst & Young.

“Even if it should pick up again from 2014, Europe will remain a crisis region for the auto industry in the medium term,” he said.

Up until now, strong demand in the world’s two biggest car markets in China and the US has helped European car makers to offset the downturn at home.

Fiat sales fell 5.5% after a similar drop in Italy’s new car market in June compared with a year earlier, the ACEA said. Total registrations were down 10.3% in the first half.

It was a similar story for big international auto groups such as Japan’s Toyota. Sales of Toyota cars slumped by 3.9% in June.

Most luxury car brands did not fare any better. Sales of BMW, the world top premium brand, fell by 7.9%.

New registrations of Audi vehicles, Volkswagen’s luxury brand, were down 8.2%, while Toyota’s Lexus plummeted by 31.4%, ACEA said. Only Mercedes-Benz managed a gain with sales rising 2.7% in June.

Renault’s budget Dacia brand jumped by 17%, helping the French company to post a modest rise in total group sales.

There were some other bright spots in the data. Greece and Portugal, which have been at the centre the eurozone debt crisis, reported a pick-up in their car markets.

In Portugal, registrations rebounded by 17.6%. Greece also posted a 2.2% increase. But in Ireland, which has also been forced to turn to the EU for a bailout, the new car market shrunk by 73.7%.