Car market ailing until 2019

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%.