Europe new vehicle sales to be flat in 2012

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Europe new vehicle sales to be flat in 2012

Post  Administrator on Wed Nov 09, 2011 8:52 am

Europe new vehicle sales to be flat in 2012, SA exporters could be affected

PricewaterhouseCoopers (PwC) automotive industry analysis unit Autofacts expects 2012 sales in the financially simmering European Union (EU) – defined as the 27 members of the EU, as well as Iceland, Liechtenstein, Norway and Switzerland – to be flat, at 15.13-million units.

Europe is a major export market for many South African vehicle and component producers.

“Given the mounting negative drivers, one could be forgiven for thinking that 2012 would see a greater deterioration than forecast. However, that would ignore a market that has been in constant decline since 2007 – then a 18.2-million market – and consequently demand in the region is already performing well below trend,” PwC Autofacts lead analyst Calum MacRae tells Engineering News Online from London.

“While a principle driver for demand in 2012 is economic performance and contributory levels of consumer and business confidence, the overlying factor in Europe remains the sovereign debt crisis, possible contagion and associated austerity programmes as nations pay down debt,” he adds.

“A vicious circle, or ratchet effect, is in danger of developing: threat of contagion > austerity programmes > consumer and business confidence > lower economic growth > lower tax revenues > sovereign debt issues and so on. Clearly something needs to break this cycle and whether it is the [recent] European Financial Stability Facility solution is too early to say.”

As for the US, another major South African export market, MacRae says Autofacts assumes light vehicle sales of 13.55-million units in 2012, which is an increase on its earlier forecast of 12.65-million units.

However, for two key elements of the US economy there are impasses developing, says MacRae.

“On one side, between lenders (low rates, but more risk adverse), consumers (paying down debt) and the industry (cash stockpiling and spending on capital rather than hiring), that has brought an equilibrium situation of low economic growth, and on the other a stalemate in the government over fiscal stimulus or austerity measures.

“Other key issues are housing and unemployment. In housing about 25% of homeowners are in negative equity, with the employment situation not improving. Gross domestic product growth is not at the level – estimated at 2.5% to 3% – to improve the picture.”

On the home front the National Association of Automobile Manufacturers of South Africa warned on Tuesday that while 2011 local new vehicle sales were expected to show a marked improvement over 2010 numbers, the prospects of slower global growth, particularly in developed economies, could impact on industry export sales going forward.

Vehicle exports from South Africa were expected to reach 281 000 units in 2011.

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