Car market ailing until 2019

Car market ailing until 2019

The Western European car market will not grow until 2019, says company advisor AlixPartners. This means we can expect the closure of more car factories, but also for retail it seems the glory days are over.

No recovery this decade

In 2012 13.2 million cars were sold in Western Europe. This year that won’t be better, and next year sales will drop to 12 million cars. Afterwards it will stabilise a bit, but a rise is not for the near future.

 

A recovery to the level of 16 million units before the crisis is not on the books before the end of the decade, says co-chairman Stefano Aversa of AlixPartners in a talk with the Financial Times.

 

Multiple trends thwart car sales

The current sales of new cars is about a quarter lower than the number of 2007, when the economic crisis hit and unemployment started rising in Western Europe.

 

Those levels from before the crisis can be put on the back burner, also because of a few other trends: the population is getting older and has less use of a new car, young people don’t necessarily need one and the cars that are sold, last longer.

 

Factories do not break even

The lower sales also have their consequences for production. Peugeot, Ford and GM/Opel for instance want to close five factories by 2016 to better align supply and demand.

 

Today only 42 of the largest hundred car factories are working at more than 75% of their capacity, the number often seen as the point where factories break even. In Italy, which was hit heavily by the crisis, the average capacity utilisation rate is at 46%.

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