Global Insight Perspective | |
Significance | The notable good health of the Italian market in April naturally boosted the Fiat Group, while Ford has clearly benefited from another strong month in the United Kingdom. |
Implications | New Car Sales slumped 0.9% in Western Europe in May. French and German carmakers appeared to bear the brunt of declines in the region caused in large by the considerable declines on their respective home markets. |
Outlook | New models launches and changes in the overall market structure could offer some opportunities to manufacturers but overall Global insight estimates that the Western Europe market context will remain unfavourable and the outlook for the Western European market has been revised downward. |
Western European passenger car sales fell 0.9% in April year-on-year (y/y) to 1,203,704 units. Despite heavy declines in Germany, France and Spain, positive results in Italy and a jump in sales in the United Kingdom combined with positive results in a number of the smaller markets buoyed the overall picture. Working-day-adjusted sales for April (there was one more working day across most markets in April 2007 compared to April 2006) showed a more marked decrease. The expected heavy falls in Germany, compounded by a lacklustre French market, left sales in the first four months down just 1.1% y/y at 5.154 million units. This was better than expected in view of the strong fall in the German market, thanks to the buoyant Italian market and a surprising spike in the U.K. market.
Western European Car Sales by Group: Global Insight Forecast (*) | ||||||
April 07 | April 06 | % Change | YTD 07 | YTD 06 | % Change | |
VWGroup | 239,948 | 239,736 | 0.1 | 975,084 | 979,747 | -0.5 |
PSA | 162,251 | 160,968 | 0.8 | 698,096 | 707,429 | -1.3 |
Ford | 124,043 | 121,272 | 2.3 | 585,271 | 569,000 | 2.9 |
GM | 119,640 | 123,439 | -3.1 | 533,094 | 535,842 | -0.5 |
Renault | 105,668 | 119,558 | -11.6 | 418,088 | 468,397 | -10.7 |
Fiat Group | 102,046 | 94,346 | 8.2 | 440,383 | 414,181 | 6.3 |
Toyota | 74,130 | 72,207 | 2.7 | 333,550 | 299,575 | 11.3 |
DaimlerChrysler | 73,692 | 74,608 | -1.2 | 295,096 | 309,655 | -4.7 |
BMW | 62,727 | 61,528 | 1.9 | 254,325 | 263,258 | -3.4 |
Hyundai | 37,003 | 40,828 | -9.4 | 171,888 | 183,943 | -6.6 |
Top 10 groups total | 1,101,148 | 1,108,490 | -0.7 | 4,704,875 | 4,731,027 | -0.6 |
We car sales total | 1,203,608 | 1,214,527 | -0.9 | 5,161,485 | 5,212,791 | -1.0 |
Source: Global Insight * Where official figures have not been released at time of posting best estimates have been used—as of the 8th May 2007 | ||||||
The notable good health of the Italian market in April naturally boosted the Fiat Group. In April the Italian carmaker reported the largest gains in Western Europe, with sales rising 8.2% y/y to 102,046 units, but it is worth noting that about two-thirds of these sales were realised at home. In fact according to figures released by the Italian Ministry of Transport, Fiat Group sales grew 14.5% in April to 66,256 units for a market share of 32.25%. Sales of the Fiat brand rose 18.1% to 51,772 units, while sales at Lancia increased to 9,262 units and Alfa Romeo sales fell to 5,222 units. Fiat aims to boost its domestic market share to 35% by 2010.
Similarly, Ford's good performance in Western Europe in April was supported by the resurgence of the U.K. market where sales of light vehicles continue to be buoyed by the recent registration plate change (1 March) an extra working day in the month and high levels of incentive spending. To a lower extent, Ford also registered strong volumes in the rampant Italian market in April.
German carmakers appeared to bear the brunt of declines in the region caused in large by the considerable declines on their home market during the month. The VW Group remained at the top of the chart again by some significant margin, but sales only advanced timidly in April after posting a mild increase in March. DaimlerChrysler (DCX) sales went again into reverse, slipping by 1.2% y/y, although DCX is expected to improve in the coming months with the introduction of the new Mercedes C-Class. Following a strong start to the year, sales at General Motors (GM) Europe dipped for the third successive months lead by the Opel brand.
Outlook and Implications
Despite the un-dynamic nature of the Western European market so far this year, the most impressive movement has been seen by Japan's Toyota. With sales up again in April by 2.7% y/y to 74,130 units, and an overall gain for the YTD of 11.3%, the automaker is making good progress towards its target of selling 1.2 million units during 2007, despite slipping sales of its Corolla model. Toyota is banking on its new replacement Auris C1-segment contender, which is already making clear headway in large volume markets such as Germany and is also effortlessly benefiting from a shift in demand toward small car segments where its Aygo and Yaris models are positioned.
Renault, however, continues to suffer from an apparent lack of new models to drive traffic toward its European showrooms, but this situation should change with the upcoming arrival of the Twingo II in June and Laguna III in September. However, the French carmaker continues its selective sales policy in an attempt to retreat from unprofitable market channels as Renault aims to re-establish a more assertive pricing potential on its new models and remains dangerously dependent on its domestic market. Conversely, PSA has managed to recover from a difficult start in 2007 thanks to the new 207 and C4 Picasso and cumulative sales are now only down 1.3%. The overall outlook for Western European market has been revised downward slightly to 14.73 million units as Germany is showing little sign of improvement, although some of this is mitigated by the better than expected U.K. market.