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            october 21, 2019

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Drop in global passenger car sales slows


The downward trend in global passenger car sales seems to be slowing. Although the world's economy is still facing serious difficulties, the measures initiated by many countries to stabilize the markets and buttress demand for automobiles is increasingly having an effect. And according to the German Association of the Automotive Industry (VDA), the slight improvement in consumer confidence in many countries might provide global car sales with a further boost in the coming months.
In Europe, passenger car sales amounted to slightly more than 1.2 million vehicles in April, a 12-percent decline from the total posted in the same month last year. However, sales were affected by the reduced number of working days as a result of the later date of Easter compared to 2008. In Western Europe sales of passenger vehicles fell by 12 percent to approximately 1.2 million units. Even though demand plummeted by 21 percent in the new EU member states, two of these countries were able to post increases: Poland (+2 percent) and the Czech Republic (+19 percent).
In April 2009 the European countries that provide sales incentives in the form of an environmental bonus continued to perform better than countries that did not offer such support. Besides Germany (+19 percent), this was particularly the case in France (-7 percent) and Italy (-8 percent). By contrast, sales were down sharply in the UK (-24 percent) and in Spain (-46 percent). In response to this development, the British government decided to also introduce an environmental bonus starting in mid-May, while Spain will in July begin to offer subsidies of €2,000 for one year for the purchase of a new car.
In the United States, vehicle sales totaled 817,300 units in April, down by 34 percent from the same month in 2008. Among the big losers were Chrysler (-48 percent) and Toyota (-42 percent). According to the Federal Reserve System, the U.S. is beginning to slowly recover from the recession. Private demand in particular is showing signs of steadying, thus opening up the possibility that passenger vehicle sales will at least stabilize in the months ahead.
Sales in Japan last month totaled 236,100 passenger cars, a 23-percent decline from the figure recorded in April 2008. The short-term outlook for the Japanese market promises no major improvement. Although the Japanese government has launched another economic stimulus package totaling $150 billion, this measure is not expected to have a noticeably positive impact before autumn.
In China, on the other hand, the automotive market experienced an impressive rebound in April, pushing passenger vehicle sales 25 percent higher than in the same month last year and marking the third consecutive month of year-over-year increases. The Chinese government's extensive economic stimulus programs are obviously having an impact, as the latest figures show signs of an economic recovery spearheaded by the automotive industry. The passenger car market is also being buttressed by the halving of the sales tax for vehicles with less than 1.6 liters of displacement, which went into effect at the beginning of the year.
Sales of passenger cars in India totaled 135,700 units last month, 4 percent more than in April 2008. The government's three economic stimulus packages with a total volume of 3 percent of the country's gross domestic product were of crucial importance for the positive development in demand. Considerably lower interest rates also had an effect, since the country's central bank has cut the prime rate by a total of 4 percentage points over the past six months.
Sales of passenger cars in Brazil totaled 224,400 units in April, a decrease of 10 percent. The drop did not come as a surprise, since there had been huge numbers of advance purchases in March. Many consumers had gone out to buy a car in order to benefit from the lower motor vehicle taxes that had been scheduled to expire at the end of March. However, the lower tax has now been extended to the end of June. The Brazilian economy is revealing itself to be comparatively robust overall, and the country's central bank has cut the prime rate for the third time this year in order to provide markets with greater liquidity.
By contrast, passenger car demand continues to decline in Russia. New vehicle registrations amounted to 135,700 passenger cars in April, a 53-percent drop from the same month last year. The economic conditions are anything but positive. According to preliminary estimates, the Russian economy contracted by 8 percent in the first quarter of 2009. In addition, inflation is running at a double-digit rate and unknown amounts of bad debts continue to be a grave concern. There are therefore fears that any further defaults could have a negative impact on Russia's financial system and its real economy.

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