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European car sales strong in June

Figures released by the analyst and forecaster JD Power-LMC show that the overall West European car market turned in a strong sales performance in June.

Total unit sales for the month were estimated at a little over 1.4 million units – some 4.7% ahead of last year.

However, high levels of consumer confidence in the UK and Spain, with resulting strong car markets, are in stark contrast to the situation in Germany and, to a lesser extent, Italy.

In the first half of 2004, total west European car sales were estimated at a little under 7.9 million units – 3% ahead of the same period last year. However, sales during early 2003 were exceptionally weak, perhaps marking the bottom of the recent cycle. Outperforming 2003 in the latter part of 2004 will prove to be a more challenging task, JD Power-LMC said.

JD Power-LMC also said that the German consumer is yet to respond as had been hoped to a steady economic recovery. The German market’s selling rate dropped to under 3.1 million units/year in June, underlining the weakness in consumer demand.

JD Power-LMC analyst Pete Kelley says: “This year it looks unlikely that the German car market will better last year’s total. We are, however, still looking to a recovery in 2005 to a level in excess of 3.4 million units when we expect to see improving consumer sales following on from better business sector sales, but much depends on developments in the economy. We still think it will be a few more years before the market gets up to the 3.8 million-unit level.

“German consumers are spending well below the cyclical average on cars at the moment and that has much to do with the current economic situation. That low spend at least points to some build-up of potential demand, but the outlook is highly dependent on an improving economy and, in particular, a decrease in unemployment.”

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