Europe Car Market Seen Ending Six-Year Drop With 2% Growth

Jan 28, 2014 10:28 am ET

(Updates with executive’s comment in fourth paragraph.)

Jan. 28 (Bloomberg) -- Europe’s car market will probably expand 2 percent this year as demand “gradually” recovers from a two-decade low, the region’s main auto-industry group said.

Sales in the region, which have dropped for six consecutive years, won’t return to pre-crisis levels in the “foreseeable future,” Philippe Varin, president of the European Automobile Manufacturers’ Association, or ACEA, said at a press conference today at the trade group’s Brussels headquarters.

Delivery gains in December show that “the market may now clearly be bottoming out,” Varin said. “We are hopeful that this year will herald the transition toward a recovery.”

Full-year sales in Europe fell 1.8 percent in 2013 to 12.3 million vehicles, the lowest figure since 1995, the ACEA said on Jan. 16. Carmakers including Renault SA and Ford Motor Co. are predicting a gradual revival in European demand, though growth will hinge on economic activity in France, Spain and Italy, which rank among the top five national car markets in the region.

Industrywide deliveries in the European Union, excluding figures from Iceland, Norway and Switzerland that the ACEA also compiles, will probably increase to “just above” 12 million vehicles from about 11.8 million cars in 2013, said Varin, who’s also chief executive officer of Paris-based auto producer PSA Peugeot Citroen.

Closing Factories

Ford, Peugeot and General Motors Co. are among carmakers shutting plants in Europe and scaling back workforces in response to the auto market’s decline. German producers of luxury vehicles, such as Daimler AG or Bayerische Motoren Werke AG, kept their regional market share steady or increased it as demand remained stronger for high-end models than for mass- market vehicles.

Car plants in Europe operated at an average 75 percent of capacity last year, Varin said. Authorities in the region should try to set rules bolstering a recovery in production, such as increasing labor flexibility or providing EU social funds to help automakers reorganize, he said.

--Editors: Tom Lavell, Chad Thomas