Europe: Longest Car Market Slump Ever Continued in 2013

The car market in Europe endured its longest ever slump with a sixth consecutive year of shrinkage during 2013. However, an unexpected spike in sales for December might finally signal a recovery, according to data that was released on Thursday.

Car sales in the European Union contracted 1.7% in 2013 to just over 11.8 million, which is the lowest number since 1995, and a shrinkage of 26% from 2007, prior to the bottoming out of the crisis in the European Market.

The drop however was not as big as the automakers had first feared when 2013 started, when initiate predictions were for losses of between 3% and 5%.

December sales largely helped to end the year with less shrinkage. A gain of 13.3% during December extended an upswing in the market to four straight months.

Analysts believe the industry is now in recovery, after bottoming out sometime during mid 2013. The end of the recession in the EU, an aging fleet in Europe supporting demand for replacement, incentives in certain countries and lower costs of financing have all fed the market upswing.

Industry experts said that while the pricing in Europe remains the world’s weakest price did not seem to be the biggest factor in the improvement of the market.

One bank in Europe projected an increase in the market of 3% for 2014, which would be its first since 2007. However, analysts cautioned that the uptick of four months should not be taken into consideration too much. The gain during December was helped by one additional working day for the month compared to a year ago and last year’s figures were considerably weak.

The increases during the fourth quarter was also helped by the incentives offered buyers and the carmakers making tactical sales via self-registrations and other maneuverings to hit their targets.

Some experts do not believe the auto market will ever get back to its peak of 2007, when 16 million units were sold and it could take up to 10 years to reach the 14.7 million that were sold in 2008.

Analysts believe a slowdown in the recovery will take hold during the first three months of 2014.

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