EU Cars All Conked Out
The Old Continent: Europe. They have always liked to pride themselves on the fact that they were quaint guys living in leafy suburbs and going to work along cobbled streets. The cafés in Paris are known for having sultry waiters that think they were born with silver spoons in their mouths and that the customers are the poor, shabbily-dressed guys. That’s what makes Europe Europe, isn’t it? Well they will soon be taking the quaintness even further. They will be going to work with pony and traps if things carry on much more the way they are going. European car sales are already falling and have been for a while now, but this year four of the largest manufacturers of cars in Europe will be making a combined loss of $6.6 billion. 13 has always been an unlucky number (except for the French: they always have to do things differently, don’t they?) and now it seems that 2013 will be no exception for cars in Europe. The car industry will well and truly splutter to a coughing stall and looks as if it will be going to the breaker’s yard for good.
Fiat Chrysler, Ford Europe, GM Europe and Peugeot-Citroen will be suffering the same sizeable loss as in2012 and the situation seems as if it isn’t going to get any better.
- Car sales have plummeted in Spain (-4.9%), Portugal as well as in France (-11.2%) and as a result these big four car manufacturers will bear the brunt of what is going wrong in the EU economy.
- Car sales haven’t been this low (with a 5% decline in 2013 being predicted) for 17 years, going back to 1996.
The European Automobile Manufacturers Association (ACEA) has suggested that the situation is set to get worse in the future and only those companies that have strong robust finances will be able to weather the storm.
- On a worldwide scale, statistics and predictions show that there should be a general growth of 3.2% in car sales throughout the world this year, but they obviously won’t be revving up to the tune of humming engines in the EUfor some reason.
Analysts of the automobile sector are in disagreement as to what will happen in the future. Moody’s predicts that there will be a slight increase in demand by early 2014 but that will not signal that the market is out of the grey area it finds itself in right now. However, The Global Automotive Sector predicts that things will not get better until mid-2014when sales will turn positive for the industry. The latter is the leading analyst in the automobile sector. New figures will be published on September 17th 2013 and we will see the real extent of what has happened in the first half of this year then. But, things are not looking promising for the already hard hit automobile industry in the EU.
- In May 2013, car sales in the EU had already fallen to an all-time low not recorded for 20 years.
May 2012 had 1.15 million new registrations andMay 2013 saw a drop of 5.9% on that figure to just1.08 million.
- Peugeot-Citroen, Renault, Fiat Chrysler and General Motors Europe recorded a fall of 10% in sales despite having cut back on prices to woo the buyers.
- Record joblessness had a marked effect on the purchasing power of Europeans and cars were at the wrong end of the hike in redundancies (unemployment hovered around the 12%-mark at the time).
- This will be the 6th year in a row that sales have fallen for the automobile industry in the EU.
- Ford Europe predicts a loss of $2 billion alone for this year.
- GM Europe has lost $18 billion over the past 14 years.
- June was little better than May, with a fall in year-on-year sales of 5.6% in the region.
Consumer Confidence and Petrol
The only thing that may be a glimmer of hope for the automobile industry is that cars like anything naturally wear out. But, even with consumer confidence on the rise in the EU it looks as if people might still be putting off that sort of purchase. The downside again is the price of petrol, with the added problem of the fear of an attack on Syria which may send petrol prices through the roof.
- Consumer Confidence increased in August 2013 to -15.60 from -17.40 in the previous month.
- The all-time low was of -34.20 in March 2009.
Just like in the EU, the US has seen a surge in buying on credit for cars.
- Leasing reached 27.6% of financed purchases of new vehicles in the US.
- It seems that the only way to buy a new car these days for over aquarter of purchasers is to do so on credit.
- In 2010 the number of purchases financed by leasing was 17.7%.
- The average loan was taken out then for 5 years, but purchasers in the US are now extending that to 6 or sometimes 7 years today.
- In debt more and for longer, which can only spell trouble.
- The situation in China is completely the opposite where car sales are surging by 10.5% (July 2013), with increased production there.
- In July there were 1.24 million units sold, which was even higher than the estimate of 1.22 million.
- There may be a fall in the EU for car manufacturers, but those same manufacturers are opening plants in China and reaping the rewards of the frenzied buying spree that the Chinese are on at the moment for automobiles.
- Car sales are predicted to be in the region of 20 million units this year, rising to 30 million units next year.
However, that may be curbed in the very near future due to increased levels of pollution in certain cities. Tianjin and Wuhan in China are two cities that are considering restricting purchases of vehicles in their towns in a bid to come to grips with the growing problems of traffic and pollution at the same time. But, surely that will do little else but alleviate a mounting problem in the world. It’s not restricting the number of cars that is going to solve the problem of pollution, but using cleaner forms of energy to power the vehicles. The problem of traffic can only be alleviated if there is a good public-transport system available. Short of walking to work, what do administrations expect people to do? They have constructed the towns in which we live on the model of urbanized areas with centers that are used for business and people living in the suburbs or on the fringes of those cities.
Car manufacturers are seeing the bottom falling out of their markets in the EU as the exhaust pipe splutters with smoke, while there are increases in China. But, it looks as if we might all be walking in the near future for different reasons. The US will be coming along with the rest of them too as they will be so saddled with debts from leasing their vehicles that they won’t be able to pay to refuel them.