Brussels, 14 July 2009 – In the first quarter of 2009, automotive production fell by 35%. While fleet renewal schemes have helped segments of the passenger car market in some countries, overall vehicle demand in Europe went further down as well.

These and other latest figures on automotive production and registrations can be found in the latest ACEA Economic Report(available on the ACEA website). The automobile industry’s trade association publishes this report three times a year, giving additional insight in market trends and automotive production.

Production of motor vehicles declined by 35% in the first quarter of 2009, with many manufacturers continuing to reduce stocks and cut output in light of reduced market demand. Van (-57%) and truck production (-56%) dropped even more than the manufacture of passenger cars (-31%).

As the European economy stayed in recession, market demand for vehicles continued to suffer: over the first quarter, new passenger car registrations dropped by 17.2%, new commercial vehicle registrations by 35.7%; five months into the year, the decrease was 13.9% for passenger cars and 37.6% for commercial vehicles.

Reflecting consumer concerns about the general economy, small cars reached a market share of 44.9% in the first five months of 2009,surpassing the record of 38.8% over the whole year 2008. At the same time, Diesel cars market penetration dropped to 46.1%, and the market share of 4x4s to 8.4%.

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

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. While 2.2 million workers are directly employed in automotive manufacturing, the ACEA report underlines that an additional 9.8 million rely on the industry for their jobs in closely related sectors. The effect on employment in the wider economy is even greater. ACEA members generate a turnover of €551 bn, and total industry exports are worth €77bn. Around €381 bn in taxes come from motor vehicles in Europe, making them a crucial source of income for governments as well.

A closer look

Production

3.4 million vehicles were produced over the first quarter of 2009, 35% less than in the same period of 2008. With a drop of 57.4%, the UK was the worst affected of the five largest European producers, followed by France (-46.0%), Spain (-40.2%), Italy (-38.6%) and Germany (-32.3%). In Austria, production went down by 69.2%.

Passenger car production fell by 31% to 3.1 million, with a decline of 56.6% in the UK, 43.5% in France, 34.1% in Spain, 30.4% in Germany, and 26.4% in Italy.

Van and truck production were most heavily touched by the continued economic downturn. Falling by 57% and 56% respectively, only 226,739 vans and 76,651 heavy trucks were manufactured in the first quarter of the year. Bus and coach production dropped by 1%.

Demand

Fleet renewal incentives are now in place in 13 Member States of the EU to stimulate demand and replace older vehicles with cleaner and safer ones. While mainly affecting the segments of small and medium-sized cars, they have had some positive effects in the first five months of 2009, when car registrations were down 13.9%, compared to -19.6% in the last quarter of 2008. Notably, the drop in May registrations was limited to 4.9%, helped by registrations going up 4.8% in Austria, 5.1% in Greece, 11.8% in France and 39.7% in Germany, all of which have fleet renewal schemes in place.

Consumers continued to turn increasingly to smaller cars, showing their concerns over the economic situation. The small segment reached a market share of 44.9% in the first five months 2009, even more than the record of 38.8% over the whole year 2008. At the same time, average engine size and power fell from 1,706cc (whole year 2008) to 1,635cc, and 86kW (whole year 2008) to 82 kW. These trends were accompanied by a drop of Diesel cars market penetration to 46.1%, and that of 4x4s to 8.4%.

With -37.6%, commercial vehicle registrations saw a sharp decline,affecting all European countries. 37.3% less vans, 40.7% less trucks and 25.3% less buses and coaches were registered between January and May.

Economic Background

The recession has become deep and widespread, affecting the EU economy despite the measures taken by governments and central banks since last autumn. GDP contracted further in the first quarter of 2009, due to still tight financial conditions and weak confidence. The economic situation continues to be exceptionally uncertain, with forecasts revised further downwards and growth in the euro zone and in the EU27 expected to drop to -4.0% in 2009 and to -0.1% in 2010. Eurostat estimated the decline of GDP for the first quarter of 2009 to be 2.5% in the euro area and 2.4% in the EU27 (quarter-on-quarter).

Forecasts

The statistics on the first five months of 2009 show how hard automotive continues to be hit by the economic downturn. 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.

Forecasts are still very uncertain and subject to constant adjustment. If trends seen in the first five months of 2009 continue, passenger car production could decline by a quarter and commercial vehicle production by half over the whole year. Most manufacturers do not expect the situation to improve until 2010. However, passenger car demand might drop very abruptly at the beginning of next year if fleet renewal schemes are not phased out gradually.

About ACEA
The European automotive industry is key to the European economy. Direct employment in automotive manufacturing amounts to 2.2 million people; indirect employment involves another 10 million jobs. Annually, ACEA members invest €20 billion in R&D, or 4% of turnover. The ACEA members are BMW Group, DAF Trucks, Daimler, FIAT Group, Ford of Europe, General Motors Europe, Jaguar Land Rover, MAN Nutzfahrzeuge, Porsche, PSA Peugeot Citroën, Renault, Scania, Toyota Motor Europe, Volkswagen and Volvo Group.

For further information, please contact
Sigrid de Vries,
Director Communications, ACEA
+32 2 738 73 45
or sv@acea.be
Please also visit www.acea.be