European Auto Sales Continue to Slide

Sales of new cars in Europe, as measured by new car registrations, dropped in June for the third consecutive month. The slide is attributed to the end of what the Europeans call scrappage plans, better known in the US as the “cash-for-clunkers” program. The following chart shows the spike in new car registrations in March, before most of the scrappage plans expired on April 1.

Ford Motor Co. (NYSE: F) saw a -15% drop in month-over-month sales, and General Motors saw sales drop of just -0.2%, mainly on the strength of sales of the Vauxhall and Opel brands. Toyota Motor Corp. (NYSE: TM) had a -12.4% drop in sales.

Compared with June 2009, European new car registrations were down 6.9%, better than the 7.4% year-over-year decline in April and the 9.3% decline in May. Car registrations totaled 1,341,092 in all of Europe in June. For the first half of 2010, new car registrations were barely better, up 0.2% compared with 2009. Compared with the first six months of 2008, new registrations fell by 10.3%.

German registrations fell -32.3% in June, compared with May, and Italian registrations fell -19.1%. The largest drop came in Slovakia, which was down -40.6% month-over-month. Ireland saw the largest gain at 75.8% over May, Spain was up 25.6%, and the UK was up 10.8%.

For the first six months of the year, 7,285,487 new cars were registered in Europe. The steepest drop was recorded in Hungary, down -43.8%, while Germany saw a drop of -28.7%. Portuguese new car registrations rose 57.7%, UK registrations rose 19.9%, and Spanish registrations rose 39.5%.

The European forecast for new car purchases in 2010 is 14-15 million, but that number may be in jeopardy. The Wall Street Journal reports that analysts at Barclays Capital expect the declines to get worse in the second half of the year, falling by 18% in the third quarter and 27% in the fourth quarter.

However, an analyst at Sanford Bernstein foresees a continuing revival of sales because the scrappage plans do not seem to have pulled demand forward. This analyst sees buyers returning to showrooms, even if slowly, and buying “larger, more profitable vehicles.”

In a related story this morning, Ford is changing its top European management as soon as it completes the sale of its Volvo division to China’s Geeley, expected later this quarter. Volvo’s current CEO will become chairman and CEO of Ford of Europe. The current head of Ford’s European group will become an EVP in charge of global manufacturing and labor affairs operations.

Ford’s shares are trading down slightly today, off about -0.17%. Toyota shares are also down about -1.3% today.

Paul Ausick