Car sales hit worst month across Europe in 2019
European car registrations fell sharply in June, resuming a downward spiral this year that has seen profit warnings at German manufacturer Daimler and a quarterly division loss at rival BMW.
Sales dropped 7.9% to 1.49 million cars, the European Automobile Manufacturers’ Association said, the worst monthly decline since December.
France and Spain had falls of more than 8%, while German and UK sales fell 4.7% and 4.9% respectively.
European car sales resumed their drop in June after a static May.
While the industry group blamed the June drop on fewer working days during the month, the weak showing adds to the gloom enveloping the sector and brings the fall to 3.1% since the start of 2019.
Daimler last week issued its fourth profit warning in just over a year due to the costs of a recall and allegations of emissions-tampering in diesel cars.
The carmaker also blamed weaker global markets.
BMW in May reported its first loss in a decade in the main automotive division.
At the year’s half-way mark, Europe is likely facing a second annual decline in car sales.
The industry association has already revised its prediction for the year to a 1% drop, blaming uncertainty surrounding Brexit and flattening demand.
It had previously forecast a 1% rise. Before last year, the industry had enjoyed uninterrupted annual growth since 2013.
“We’re standing in front of a difficult second half of the year,” said Peter Fuss, a partner at EY consultancy.
“Little positive impetus for the new car market in the EU can be expected in the coming months,” he said. In addition to weakening markets, a truce in the US-China trade spat remains delicate.
US president Donald Trump said earlier this week he could impose additional tariffs on Chinese imports if he wanted to, after promising last month to hold off on more duties.
Tensions between the two nations have hurt China’s economy, prompting car sales to slump, and have hurt the export of BMW and Mercedes-Benz cars made in the US.
The Stoxx Europe 600 Automobiles & Parts Index declined, and Volkswagen and Renault shares fell.
French automaker Renault was more optimistic, saying earlier this week it expects European vehicle sales to remain stable this year, barring a hard Brexit.
While the French carmaker expects some recovery in volumes during the rest of 2019 thanks to new models, it sees the global car market shrinking by around 3%.
Renault’s partner Nissan Motor was the worst hit during the first six months of this year, registering a 24% drop in European sales as its best-selling SUVs Juke and Qashqai face competition from rivals such as PSA Group’s Peugeot 3008 and Renault’s Captur.
A company spokesman attributed the decline to a move away from less profitable sales channels such as rentals and a transition from current models to newer and cleaner engines.
After Nissan, Honda and Fiat-Chrysler registered the worst sales in Europe since the start of the year with 15.4% and 9.5% declines respectively.
In May, European car sales rose 0.1%, an unexpected and slight reprieve in a nine-month run of lower sales.
The market benefited from trade-in incentives for older diesel cars and two additional shopping days that month.
The possibility that the car market has passed a peak would come at a particularly unfavourable time for manufacturers, who are scrambling to pay for an unprecedented shift to electric and autonomous vehicles.
Battery-powered car sales are still a fraction of the total, something that could change as tough emissions regulations come into effect next year.
Meanwhile, Renault said it will invest €128.5m for a 50% stake in a venture with Jiangling Motors to develop electric vehicles in China.
The entity was created in 2015 and already holds certification to manufacture battery-electric passenger cars.
It aims to grow quickly and become a “prominent player” in the Chinese market, Renault said.
“This partnership in electric vehicle business with JMCG will support our growth plan in China and our EV capabilities,” Francois Provost, head of the China region at Renault, said.
Renault, which has had a limited presence in China, is pushing ahead with an electrification strategy that includes a new battery-powered car that will go on sale in China along with a plan to make hybrid versions of three of its existing models.
Renault also has plans to invest more than €1bn to boost its production of electric cars in France — a move that was aimed at smoothing relations with the French government, its biggest shareholder.
