Car sales in Europe reached its lowest level of 12.05 million
units in 2012 since 1995, according to the European Automobile
Manufacturers' Association (ACEA). This indicated a
year-over-year decline of 8.2% due to the sagging demand for
cars, as highly indebted banks were reluctant to finance new car
purchases for customers. The decline was the steepest in the
highly troubled euro zone, where car sales dipped 11.3% to
roughly 9 million units, according to Reuters.
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Car sales in December fell for the straight 15th month and at the
fastest pace since October 2010. As many as 799,407 vehicles were
sold during the month, falling short of the 2011-level by 16.3%.
Most of the major EU markets registered a double-digit fall in
sales in December. Sales tumbled 14.6% in France, 16.4% in
Germany, 22.5% in Italy and 23.0% in Spain. The U.K. was the only
market that came up with a sales growth of 3.7% in the month.
Sales by Automakers
The U.S. automakers
General Motors Company
Ford Motor Co.
) saw the steepest decline in sales among all the major
automakers operating in the continent. Each of their sales shrank
27% in December. Meanwhile, Japanese automaker
Honda Motor Corp.
) sales slipped 6.7% in the month.
Among the European automakers,
) - biggest in Europe - recorded a 15% decline in sales in
December, driven by a 20% fall in sales of its namesake brand.
) and Renault each posted a 19% fall and
) recorded a decrease of 18%.
Plant Closures and Job Cuts
Most of the major automakers in Europe are resorting to job cuts
and plant closures, as it became no longer feasible for them to
undertake full-fledged operations in the continent. Unemployment
in the EU reached 26 million in November last year, while the
unemployment rate increased to 10.7% in the same month from 10%
in November 2011.
Among the U.S. automakers, Ford plans to shut vehicle and
component plants in the U.K. and Belgium in the next two years
while General Motors would suspend car production at its Bochum
plant in Germany - which employs 3,100 workers, - in 2016.
Among the European automakers, Renault plans to retrench 7,500
jobs in France by 2016 while each of Fiat and Peugeot has decided
to eliminate 1,500 jobs. Among the Japanese automakers, Honda
recently announced plans to terminate 800 jobs at its South
Marston plant near Swindon in southwest England in the second
quarter of 2013.
Europe Versus U.S.
Auto sales in the U.S. grew 13.4% to the five-year high of 14.5
million vehicles in 2012 including a 9% rise to 1.4 million in
December last year. A host of macroeconomic factors helped the
industry reach the height. They include improving consumer
confidence, falling unemployment and improvement in home sales
Sales were also fueled by strong pent-up demand, due to both
aging vehicles (average age of a car reached 11 years in the
U.S.) and the need to replace damaged vehicles from Hurricane
Sandy. Banks were also friendlier as they offered greater access
to loans with lower interest rates.
The automobile industry in the U.S. is expected to scale new
heights in 2013 based on improving macroeconomic conditions. By
2014, sales in the U.S. are expected to surpass 15 million units.
In contrast, sales in Europe are expected to continue to sink in