Europe Car Sales Slump as German Sentiment Wanes: EconomyMathieu Rosemain and Scott Hamilton
European car sales slumped to a two-decade low, German investor confidence unexpectedly dropped and euro-area exports fell for a second month, adding to signs that the region is struggling to emerge from recession.
Auto registrations decreased 6.3 percent in June from a year earlier to 1.18 million vehicles, the European Automobile Manufacturers’ Association said today. The ZEW index of German investor and analyst expectations fell to 36.3 in July from 38.5, while economists forecast a gain to 40, according to the median of 37 estimates. Euro-region exports dropped 2.3 percent in May from the previous month.
The reports suggest the “subdued” recovery predicted for later this year by European Central Bank President Mario Draghi has yet to materialize at a time when unemployment remains at a record. Executives at Peugeot and French competitor Renault SA reiterated predictions this month that the region’s car market will fall 5 percent in 2013 in the sixth annual drop.
The data are “still consistent with the picture that the ECB has, that it will take quite a while until the economy will stabilize,” Jens Kramer, an economist at NordLB in Hanover, said in a telephone interview. “In those countries that are still in deep recession, which is not the case in Germany, the challenges are huge.”
Exports from Germany, Europe’s largest economy, slumped 9 percent in May to 38.1 billion euros ($50 billion), data from the European Union’s statistics office in Luxembourg showed. French shipments fell 4.6 percent, while Italian and Spanish exports rose 3.6 percent and 0.8 percent, respectively.
The region’s car sales in the first half fell 6.7 percent to 6.44 million vehicles. The June figure was the lowest for the month since 1996, and the six-month number was the least since 1993, said Quynh-Nhu Huynh, the ACEA’s economics director.
“It’s still a weak car market, and I don’t think that it will get better in the very near future,” Sascha Gommel, a Frankfurt-based analyst at Commerzbank AG, said by phone. “I wouldn’t expect a recovery in the second half, but rather a stabilization at a low level.”
The ACEA figures come from the 27 nations that were European Union members prior to Croatia joining this month, plus Switzerland, Norway and Iceland. Deliveries in Western Europe, which excludes countries that have joined the EU since mid-2004, fell 6.2 percent to 1.11 million vehicles in June and 6.6 percent to 6.06 million units in the first half.
Four of Europe’s five largest automotive markets shrank last month, with deliveries in Germany, the biggest, dropping 4.7 percent, and demand falling 8.4 percent in third-ranked France. U.K. sales rose 13 percent.
“By any standards, the region remains a dreadful zone for most manufacturers,” Carlos Da Silva, a Paris-based analyst at IHS Automotive consulting company, said in an e-mail. Even so, figures excluding calendar effects “indicate that west European sales have eventually started to bottom out,” which is “not the same thing as saying they have started to recover.”
The June drop in German investor confidence gauge from the Mannheim-based ZEW Center for European Economic Research, which aims to predict economic developments six months in advance, was the first decline in three months. Industrial production, factory orders and exports all slid in May, and while unemployment dropped in June and the Ifo institute’s measure of business confidence rose, the ECB says risks to the economic outlook in the euro area remain on the downside.
“Signals have been very contradictory,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “Sentiment indicators have been good, concurrent indicators were rather weak, but I’m not too pessimistic for the rest of the year. Uncertainty is slowly waning and the ECB’s forward guidance should provide some support.”
Draghi this month pledged to keep interest rates low for an “extended period.”
In the U.K., which is also experimenting with giving forward guidance on the path of interest rates since Mark Carney took over as Bank of England governor, inflation accelerated less than economists forecast in June. Data today showed consumer prices rose 2.9 percent from a year earlier, compared with the 3 percent median forecast in a Bloomberg News survey of 31 economists.
Elsewhere today, India stepped up efforts to help the rupee after its plunge to a record low, raising two interest rates in a move that escalates a tightening in liquidity across most of the biggest emerging markets. Australia’s central bank said its currency’s decline and past interest-rate cuts meant its policy setting was appropriate even as it maintained room for future reductions, according to minutes of its July 2 meeting.