Europe’s Car Market Falls for the First Time Since 2013, Dragged Down by the U.K.

(Bloomberg) -- Annual car sales in Europe dropped for the first time since 2013, led by a sagging U.K. market where concerns over Brexit turned off consumers -- and have only intensified as politicians argue over the path to a divorce.

Passenger-car registrations dropped 0.04 percent to 15.6 million vehicles in the European Union and European Free Trade Association, according to the European Automobile Manufacturers Association. This follows four months of straight declines after new EU emissions test rules came into force, leading to production bottlenecks.

Key Insights

  • Carmakers battled mounting hurdles in 2018, prompting many including Daimler AG and BMW AG to cut profit targets. They’re not expecting much of a reprieve in 2019. Concerns for a disorderly Brexit have gotten worse and economic growth is slowing in Germany, the region’s biggest market.
  • “We are increasingly cautious on the region,” Evercore ISI analyst Arndt Ellinghorst said in a note that updated an EU 2019 auto forecast to a 1 percent decline, citing weak industrial orders in Germany and eroding EU consumer confidence.
  • With the decline in China, two of the world’s biggest car markets fell last year and the U.S. barely rose. The global downturn comes at a bad time for carmakers’ bottom lines as they use up record funds to keep up in the shift to electric and self-driving cars.
  • Worries about trade tensions with the U.S. on European-made cars continue to bubble in the background. While U.S. President Donald Trump has held off on imposing new car import tariffs, the Commerce Department is working on a revision of its report into the matter.

Market Reaction

  • Shares of European carmakers gained on Wednesday, after Prime Minister Theresa May’s defeated plan in Parliament increased the chances of a delay in Brexit. Daimler AG, Aston Martin, BMW, PSA Group and Renault were all up slightly as of 8:18 a.m. in London. The Stoxx 600 Autos and Parts Index was up 0.27 percent at 11 a.m. in Frankfurt.

Get More

Europe’s Car Market Falls for the First Time Since 2013, Dragged Down by the U.K.

©2019 Bloomberg L.P.