European car sales speed up after six years of decline

PARIS (AFP) ― New car sales in Europe rose by nearly 6 percent in 2014, ending a long slump in activity that began in 2007, but analysts warn the sector has not yet turned the corner in the region.

The European Automobile Manufacturer’s Association said last week that 2014 new car sales grew by 5.7 percent, but noted current volumes of activity remain significantly lower than they were before the global financial crisis that drove the sector into six years of decline.

Europe’s continuing economic sluggishness means carmakers are unlikely to be able to repeat 2014’s performance, with analysts expecting sales growth to be limited to 1-3 percent this year.

A recovery to pre-crisis levels is most likely still years away.

Carlos Da Silva, an auto industry expert at IHS consultants, said that “2014 should be taken with relief and satisfaction.”

“However, by any means, this growth should not be misinterpreted: the foundations for a flourishing car market are yet to be built,” he added.

“Right now, the patient is still limping, not starting to run on both legs!”

The European car sector’s convalescent state is clear in comparing the 12.5 million units sold last year to the 16 million which rolled off dealer’s lots in 2007 before Wall Street unleashed a global financial crisis.

IHS said it does not expect the market to approach those levels until the end of the decade.

Moreover, activity across Europe varied greatly by market, lacking the generalized effervescence needed to drive enduring growth across the industry.

Among the largest markets, Spain led the sales growth at 18.1 percent, in part due to a new government incentive program.

Britain followed with 9.3 percent growth, Italy at 4.2 percent, Germany 2.9 percent. France managed only 0.3 percent growth.

“The situation in Europe is still quite contrasted, but it’s much better than we expected at the beginning of the year, when we forecast 2-3 percent,” noted Jean-Francois Belorgey, an analyst with consultants EY.