LMC Sees Western Europe Car Sales Picking Up on Economy

Photographer: Simon Dawson/Bloomberg

The U.K. remains one of the few bright spots for automakers in Europe, where demand for vehicles is sliding to a 20-year low amid a shrinking economy and high unemployment. Close

The U.K. remains one of the few bright spots for automakers in Europe, where demand for... Read More

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Photographer: Simon Dawson/Bloomberg

The U.K. remains one of the few bright spots for automakers in Europe, where demand for vehicles is sliding to a 20-year low amid a shrinking economy and high unemployment.

Western European car sales rose 4 percent in July as an additional selling day and a stabilizing economy contributed to the second monthly gain in 2013, according to date collected by LMC Automotive.

Registrations increased to an estimated 950,444 cars from 914,274 vehicles a year earlier, the research company said today in a statement. That narrowed the seven-month decline to 5.4 percent for a total of 7 million cars, with the annualized selling rate at almost 11.5 million units, it said.

“As the underlying economy begins to improve, we forecast that so too will the region’s car market,” Jonathon Poskitt, an analyst at LMC in Oxford, England, said in the statement. “The situation will slowly pick up over the remainder of the year.”

Industry executives are forecasting that the European car market will shrink by about 5 percent this year, the sixth annual drop, amid the region’s sovereign-debt crisis. Daimler AG (DAI) and PSA Peugeot Citroen are among manufacturers saying that the drop in demand may have bottomed out.

German factory orders increased by the most in eight months in June, U.K. industrial production that month beat forecasts and Italy’s economic contraction slowed in the second quarter, according to figures released today, adding to evidence of a nascent recovery.

U.K. Jump

Demand for cars in Germany, Europe’s biggest economy, increased in July while sales in France, Europe’s third-biggest auto market, rose for the first time since October 2011. U.K. registrations jumped 13 percent in the 17th consecutive monthly gain, the London-based Society of Motor Manufacturers and Traders said today.

The U.K. automotive-industry group raised its forecast for deliveries in the country, predicting growth of 8.4 percent to 2.22 million vehicles instead of the 3 percent increase foreseen earlier.

“Strong business and consumer confidence in July saw the new car market continue to rise, posting double-digit growth in the month,” SMMT interim Chief Executive Officer Mike Baunton said in a statement. “We’ve seen a range of economic indicators point to improving conditions and our raised sales forecast emphasizes how positively we view the rest of 2013.”

The country overtook France last year as Europe’s second-largest car market, and it has has been one of the few bright spots for the region’s auto manufacturers, helped by zero-percent financing and vehicle-price discounts. Demand in the U.K. continued to expand because of “solid improvements” in both private and fleet sales in July, Poskitt said.

Selling Day

Western European car sales last increased in April. The July figure was helped by an average of one additional selling day in the region versus the year-earlier month, and demand may stabilize as the economy improves, LMC said.

Car sales in Spain rose in July, supported by a government-backed program to trade in obsolete vehicles for scrapping for purchases of new ones. The Italian market showed the smallest contraction in almost two years, LMC said.

First-half registrations in Europe, including countries that have joined the European Union since mid-2004, fell 6.7 percent from a year earlier to 6.44 million vehicles, industry body ACEA said last month. The June figure was the lowest for the month since 1996, and the six-month number was the least since 1993, the Brussels-based group said.

The ACEA is scheduled to report July and August car-sales figures in September.

To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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