A new report based on information collected by the European Union indicates that cars sales are holding up better in Western Europe, where incentives are in place, than in new emerging markets in Eastern Europe that automakers had been counting on for new growth.
Eurofund issued a “Report on Recent Restructuring Trends and Policies in the Automotive Sector” and it found that during the first four months of 2009, new car registrations dropped by 15.1% in Western Europe, and by 21.4% in the 10 new E.U. Member States.
The market contracted by 4.8% in France, 16.3% in Italy, 28.5% in the UK, and 43.7 % in Spain. Germany was the only market in the former EU15 Member States where the number of new registrations actually increased — growing by 18.4% thanks to the success of programs for scraping older vehicles.
Scrappage programs in Western Europe have led to 500,000 additional passenger vehicles sold in the region from January through May 2009, according to recent analysis by R. L. Polk & Company.
While year-over-year registrations in Western Europe fell 12.6% or 800,000 vehicles, the loss was mitigated by the effect of scrappage programs, which have been implemented in Austria, France, Germany, Greece, Italy, Portugal, Spain, the Netherlands and the United Kingdom.
Eurofund, however, found that registrations in Hungary and Romania fell sharply, by 51.5% and 51.8% respectively.
There were some exceptions to the trend. Sales of new vehicles grew in Poland, the Czech Republic and Slovakia, where the sales trend was positive. New car registrations increased by 2.4% in Poland, by 19% in the Czech Republic and by 43.5% in Slovakia respectively.
The automotive sector is hugely important in developed economies, accounting for 7% of all manufacturing in the European Union. When the supply chain is included, one-third of all EU manufacturing relies on this sector, according to Eurofund.
“The depth of the recession, as well as concerns regarding the timing of a recovery has generated huge uncertainties, leading to a massive decline in demand across the board,” the report noted. The downturn in the auto sector also has led to short weeks for autoworkers in France and Germany.