European vehicle output slumps 35 per cent

Jul 14, 2009, 11:44 GMT

Berlin - The European Automobile Manufacturers' Association (ACEA) warned Tuesday that there was unlikely to be a pickup in the region's car business before next year, with vehicle production slumping by a sharp 35 per cent in the first quarter of the year.

Releasing its latest quarterly report, the Brussels-based ACEA said the big fall in production in the first three months of the year compared to the same period last year followed reduced market demand and moves by many vehicle manufacturers to cut stocks.

'While the outlook for the second half of 2009 remains uncertain, current developments imply that production may fall as much as 25 per cent over the whole of 2009 for passenger cars, and at least 50 per cent for commercial vehicles,' the ACEA said.

The ACEA figures showed passenger car production had dropped by 31 per cent during the first three months of the year compared to the same period in 2008 with output of vans tumbling by 57 per cent and truck production slumping by 56 per cent.

'Given the importance of automotive for Europe, it is clear that further difficulties for the sector will continue to negatively impact the whole of the economy,' said the ACEA.

With the European economy stuck in recession during the first three months of the year, new passenger car registrations dropped by 17.2 per cent with new commercial vehicle registrations down by 35.7 per cent.

Five months into the year, demand for passenger cars was down 13.9 per cent and by 37.6 per cent for commercial vehicles with the global recession having plunged the world automobile sector into a crisis.

The ACEA said the figures for the first five months of 2009 show how hard automotive industry has been hit by the global economic downturn.

This is despite the success in some European states of government schemes aimed at encouraging consumers to scrap older model cars and replace them with environmentally cleaner models.

The government's so-called fleet renewal schemes resulted in car registrations jumping by 11.8 per cent in France and 39.7 per cent in Germany during May compared to the same month in 2008.

Economic uncertainty and energy costs have also resulted in consumers continuing to turn to smaller cars, with the small car segment reaching a market share of 44.9 per cent in the first five months 2009. This was even more than the record of 38.8 per cent for the whole of 2008, the ACEA said.

However the ACEA warned: 'Fleet renewal schemes have supported demand in certain segments of the passenger car market, while the negative trend for others and for the commercial vehicles market remained on a downward path.'

'Most manufacturers do not expect the situation to improve until 2010,' the ACEA said.

'However, passenger car demand might drop very abruptly at the beginning of next year if fleet renewal schemes are not phased out gradually,' it warned.

While 2.2 million workers are directly employed in Europe's vehicle industry, the ACEA estimates that another 9.8 million rely on the sector for their jobs in closely related business sectors.

In addition to generating a turnover of 551 billion euros (767 billion dollars), European car industry exports are worth 77 billion euros.