Europe’s Car Sales Fall 18%, Dashing Hopes for a Comeback

In this article

European car sales plunged by nearly a fifth in August, dashing hopes that the industry was starting to recover from the pandemic and suggesting that the market could remain depressed through year-end.

The results snapped a three-month streak of easing declines, the European Automobile Manufacturers Association said Thursday. Sales had slipped only 3.7% from a year ago in July.

The drop was worse than the 15% decline that Michael Dean, a Bloomberg Intelligence analyst, anticipated based on data reported by the top-five countries in Europe that account for almost three quarters of sales. The fall is surprising given the expectation of some pent-up demand after months of lockdowns, he said in areport Wednesday.

“Sales are on track to decline by at least 20% in 2020, and the drop may be worse if August’s setback is an indication that July’s demand bounce was only a short-lived recovery supported by subsidies,” Dean wrote.

Government Subsidies

While government subsidieshelped sales recover in recent months, France’s scrappage program that offered 5,000-euro ($5,900) subsidies toward new-car purchases expired at the end of July. Coronavirus infection-rate spikes inFrance andSpain now pose a renewed threat.

Europe’s new-car registrations have fallen by almost a third this year to 7.3 million. Sales haveheld up better in the U.S. and have startedgrowing again in China.

German Chancellor Angela Merkel hasheld firm against calls by the country’s auto industry for more state aid, despite some of her ministers calling for additional help. The slump has had an outsize effect on suppliers that have seen orders for components crater and been pressured to cut prices.Continental AG, one of the world’s largest parts makers, said this month it will cut as many as30,000 jobs, whileSchaeffler AG is culling4,000 positions and closing or selling several plants.

Source: Read Full Article