European Auto Market Growth Set to Slow as Car-Sharing Expands

  • Sales reached six-year high of 14 million autos in 2015
  • Uber rides, BMW, Daimler car-sharing offer options to drivers

Europe’s auto market, which reached a six-year high in 2015, is unlikely to beat its 2007 record any time soon as population growth fades and car- and ride-sharing services such as Uber Technologies Inc. offer increasing alternatives to owning a vehicle.

Car sales in Europe jumped 9.2 percent to 14.2 million vehicles in 2015, the trade group ACEA said Friday. IHS Automotive predicts that demand in 2016 will rise 2 percent to 3 percent as the economy expands, according to Carlos Da Silva, the consulting company’s vehicle-sales forecast manager for the region. Even so, last year’s registrations were 12 percent less than the almost 16 million vehicles sold nine years ago.

European Auto Sales

“There are lots of positive tendencies, but for the market to get to the 2007 level, let alone exceed it, that’s going to be difficult in the foreseeable future,” said Peter Fuss, a partner at consulting company EY’s German unit. “Europe isn’t an area of strong demographic growth and car ownership levels are already high. That’s different, for example, in Asia.”

Business and consumer confidence in the countries sharing the euro is at the highest in almost five years as the region slowly revives from a recession that ended in mid-2013. That’s encouraged car purchases as buyers feel more secure about future income. While European industry leader Volkswagen AG has lost market share amid a diesel emissions-test cheating scandal, competitors including Ford Motor Co., Daimler AG and Fiat Chrysler Automobiles NV have gained customers with new sport utility vehicles.

With demand waning for traditional hatchbacks and sedans, manufacturers are pursuing more growth in SUVs. Ford forecast this week that its European sales of the models will jump more than 30 percent to 200,000 vehicles in 2016. Volkswagen’s high-end Bentley and Lamborghini units and Fiat Chrysler’s Alfa Romeo and Maserati nameplates plan to introduce their first SUVs in the next two years.

“SUVs will remain very popular, and we’ll see more product variants from more manufacturers in future,” said Christoph Stuermer, an analyst at research company PwC Autofacts who’s predicting overall European car-market growth of 3.9 percent this year.

Still, longer-term expansion prospects are limited. Thomas Besson, an analyst at Kepler Cheuvreux, said in a report Friday that he’s keeping “a fundamentally cautious approach on the sector as the global cycle matures.”

Potential drags on the economy and consumer confidence include recent terrorist attacks in France and Turkey, while demand is being transformed by the so-called sharing economy, EY’s Fuss said. In addition to Uber’s efforts to add service in the region, European manufacturers have set up car-sharing units, including Daimler’s Car2Go or BMW AG’s DriveNow.

“There’s a shift in behavior among consumers as car-sharing schemes proliferate,” Fuss said. “It doesn’t necessarily mean the fleet of cars decreases. Car-sharing is one influence among many.”

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