European auto market slowing as car-sharing expands
Europe's auto market, which reached a six-year high in 2015, is unlikely to beat its 2007 record any time soon as population growth fades and car- and ride-sharing services, such as Uber, offer increasing alternatives to owning a vehicle.
Car sales in Europe jumped 9.2pc to 14.2 million vehicles in 2015, the trade group ACEA said on Friday. IHS Automotive predicts that demand in 2016 will rise 2pc to 3pc as the economy expands, according to Carlos Da Silva, the consulting company's vehicle sales forecast manager for the region. Even so, last year's registrations were 12pc less than the almost 16 million vehicles that were sold nine years ago.
"There are lots of positive tendencies, but for the market to get to the 2007 level, let alone exceed it, that's going to be difficult in the foreseeable future," said Peter Fuss, a partner at consulting company EY's German unit. He added: "Europe isn't an area of strong demographic growth and car ownership levels are already high. That's different, for example, in Asia."
Business and consumer confidence in the eurozone is at the highest in almost five years as the region slowly revives from the recession.
That has encouraged car purchases as buyers feel more secure about future income. While European industry leader Volkswagen has lost market share amid a diesel emissions-test cheating scandal, competitors including Ford, Daimler and Fiat have gained customers with new sports utility vehicles. European sales of the models will jump more than 30pc to 200,000 in 2016.
"SUVs will remain very popular and we'll see more product variants from more manufacturers in future," said Christoph Stuermer, an analyst at research company PwC Autofacts, who is predicting overall European car-market growth of 3.9pc this year.
Still, longer-term expansion prospects are limited. Thomas Besson, an analyst at Kepler Cheuvreux, said he is keeping "a fundamentally cautious approach on the sector as the global cycle matures." Potential drags on the economy and consumer confidence include recent terrorist attacks in France and Turkey, while demand is being transformed by the so-called sharing economy, EY's Fuss said. In addition to Uber's efforts to add service in the region, European manufacturers have set up car-sharing units, including Daimler's Car2Go or BMW's DriveNow.
"There's a shift in behaviour among consumers as car-sharing schemes proliferate," Fuss said. "It doesn't necessarily mean the fleet of cars decreases. Car-sharing is one influence among many."
Sunday Indo Business