Is Europe catching the car bug?

After 2008, most industries have felt a little bit of trouble due to the global recession, but Europe’s auto market seems to be recovering. The industry is reporting an increase in car sales for the last 6 months, with February being the largest of all.

Excluding France, most major markets in Europe have felt an increase in car sales last month. Britain, Germany, Italy, and Spain are all experiencing growth, but the announcement has to be taken with a grain of salt. While this February had an increase of 8% compared to 2013, it’s still the second lowest since the recording method started in 2003. These announcements are still good as any growth is positive for the companies, but what caused it?

…every silver lining has a dark cloud, in this case it’s the level of discounting that’s pumping up sales. One analyst compared the current situation in Europe to the profit-killing discounting carried on by GM and Chrysler before bankruptcy…

With lower interest rates and underselling happening within the market, the growth itself shows a higher amount of registered sales, but the sales themselves are less substantial. Also, many analysts are looking towards a decrease in sales as the summer gets into swing as August was the rock bottom in sales in 2013.

The market itself and which companies are pulling ahead is interesting as well: Ford and GM averaged around 12 percent, Toyota up 14%, while Volkswagen Group’s subsidiary companies (Audi, Seat, and Skoda) buoyed the company to a 7% increase. However Hyundai and Honda experienced lower sales than the previous year. This change might show signs that the people are buying from more local areas, or that Honda and Hyundai need to rethink their marketing strategies for the area.

Overall, the statistics are somewhat bland, but what’s interesting is that these numbers are usually used as ways to monitor the overall economy due to the higher volume of workers that the industry employs. With an increase like this, the news may help stimulate some of the slowly growing economies in the region, but if the growth is truly due to discounts instead of actual economic growth, it could end up as a new problem on its own due to inflation, or just signal a still relatively stagnant economy.

 

Sources:

http://www.nytimes.com/2014/03/19/business/international/european-car-sales-extend-recovery.html?_r=0

http://www.autoblog.com/2014/03/22/european-car-sales-up-8-percent-february/

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One thought on “Is Europe catching the car bug?

  1. Brian, I couldn’t help but wonder, what’s the future for US automakers in Europe?Is there growth in the future there, or are US manufacturers losing ground?

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