Every Silver Lining Has A Cloud!
The Frankfurt Auto show, as usual, did not disappoint with a swathe of new product launches, concepts cars and downright flights of fantasy. Noticeable is the full-on charge of the premium brands into the hot hatch markets, with perhaps the pick of the bunch being the new Mercedes CLA 45 AMG, a street legal weapon that is sure to put a fizz into many a young man’s loins.
But all is not well in the Eurozone car market where it is reported that sales have dropped by 5% to just 653 782 units for the first half of the year; this is the lowest number since records began in 1990. The Volkswagen Group, the largest manufacturer in the Eurozone, saw a drop of 11% last month alone and by 17% in its namesake Volkswagen Brand. The VW Group includes such iconic brands as Audi and Porsche, and also Seat of Spain and Skoda of the Czech Republic.
Florent Couvreur of CM-CIC Securities said, “When people say we’ve reached the bottom, I say, ‘watch out,’ because the market is still decreasing. The drop is a little less steep, but we’re still falling because of the bad macroeconomic environment.”
Over at PSA, the eurozone’s number 2 car manufacturer, there was an 18% drop in August alone, a fall that has diminished their market share to just 11% for the year to date. PSA has just announced that the EU has approved a French government EUR7 billion bond issue for its troubled finance arm, PSA Banque. This move that has left some industry insiders calling foul and accusing the French government of effectively subsidising PSA car manufacturing.
There could be more pain for the likes of PSA and Renault who traditionally dominate the French market and have a substantial share of the Eurozone market. As unemployment and tax rates remain high, Couvreur is predicting that sales could drop as low as 1.5 million units for the year.
Of course every cloud has a silver lining: there has never been a better time to buy a car in the Eurozone with manufacturers showering gifts and offering unbelievable incentives on would-be purchasers. A hot hatch, anybody?