Mixed sales results in Europe

NEW car sales in the UK improved marginally last month, but the expected boom from the introduction of a scrappage scheme in the middle of May has not yet translated into showroom traffic.

Official figures for May revealed that 134,858 new vehicles were registered in Britain, which was down 24.8 per cent on the same month last year but better than the average slide of 27.9 per cent for the first five months of the year.

However, sales in Germany and France continue to flourish under scrappage schemes introduced earlier this year.

The German market rose 39.7 per cent in May to 384,578 units – about 10,000 more than in April – while France recorded an 11.9 per cent rise to 206,387 against an overall decrease of 1.3 per cent year-to-date, aided by the release of new-style registration plates.

Last week, the British government triumphantly declared that its pound-for-pound scheme with manufacturers had resulted in 35,000 orders being placed, but – as the Society of Motor Manufacturers and Traders warned at the time – these are yet to show up in the official sales figures.

“While consumer confidence is improving, the UK motor industry is still facing a difficult economic climate,” said SMMT chief executive Paul Everitt.

Left: Vauxhall Corsa.

“We have seen an encouraging start to the scrappage incentive scheme with 35,000 orders being placed since it was announced, although it will take time to feed into registration figures.” The top-selling cars in the UK were the Ford Fiesta, Ford Focus, Vauxhall Corsa (Barina) and Volkswagen Golf.

Spain, where the car market has been decimated over the past year, also introduced a scrappage scheme in early May but has yet to see the benefits, registering its 13th consecutive drop in sales in May, down 38 per cent to 71,161 units.

In Italy, where scrappage incentives of up to €5000 ($A8760) were introduced in February, sales have begun to wane again. Sales dropped for the second consecutive month in May, down 8.6 per cent to 188,670 units.

Germany has been the stand-out performer in Europe in recent months, but market analysts suggest it will pay the price later, when other markets begin to recover.

Adam Jonas from Morgan Stanley told Automotive News that the market was on steroids and “not real”.

“It’s pleasure up front with the pain coming next year,” said Mr Jonas.

He said demand would drop off once the incentive scheme ran out, and predicted sales in May 2010 could be down as much as 30 per cent.

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