SMM: European car sales fell nearly 1/5 in August, dashing hopes for the auto industry to recover from the epidemic, and the market may even remain depressed until the end of the year.

In August, new car sales in the European passenger car market fell 17.6 per cent from a year earlier to 884394, according to (ACEA), the European automakers' association. The decline widened again from the previous month (- 3.7 per cent), ending a narrowing trend for three consecutive months.

Car sales performance in Europe in the first eight months (photo: Bloomberg)

Sales in all European car markets fell year-on-year in that month, except Cyprus, where sales rose 14.1 per cent year-on-year. Of the five major European markets, Italy performed best, falling by just 0.4 per cent, thanks in part to the stimulus plan for car consumption that came into effect on August 1st, followed by the UK, with sales down 5.8 per cent from a year earlier. Although the Spanish government allocated 250 million EUR of car swap funds in mid-June, car sales fell 10.1 per cent in August. Sales in France fell 19.8 per cent in August because the stimulus package for car consumption officially ended on July 31, while Germany suffered the biggest drop of 20 per cent, and the car industry is now calling for more government aid.

In the first eight months of this year, demand for new cars in the European passenger car market contracted by 32.9% to 7267621 vehicles compared with the same period last year. Of the five mainstream markets, Spain had the largest decline of 40.6 per cent, while Germany had the smallest decline of 28.8 per cent, while the UK, Italy and France fell 39.7 per cent, 38.9 per cent and 32 per cent respectively.

In terms of car companies, 10 of the top 15 saw double-digit declines in sales in Europe in August, with Mitsubishi falling the most, with more than 30 per cent; three other companies (Toyota, FCA and Volvo) fell less than 10 per cent; BMW and Kia were the only ones with sales growth of 6.3 per cent and 3.3 per cent, respectively.

In the first eight months of this year, most car companies' sales in Europe fell by more than 30%, with only BMW, Hyundai, Toyota and Volvo falling less than 30%. Volkswagen remains the king of car sales in Europe, selling 1880042 vehicles so far this year, accounting for 25.9 per cent of the market, followed by PSA with 14.5 per cent and Renault with 10.3 per cent.

Overall, the decline in car sales in Europe in August was higher than the 15 per cent year-on-year forecast by Bloomberg Intelligence analyst Michael Dean, who said in a report this week that "pent-up consumer demand for cars during the blockade of the epidemic has been released in recent months, but the decline in August sales was surprising. If the August setback shows that the rebound in car demand in July was only spurred by government subsidies, sales will fall even more in the coming months. " Dean forecasts that European car sales will fall by at least 20 per cent in 2020.

Economists also say the unemployment rate is rising as governments end their job protection programs during the epidemic, which could weaken consumer demand in the coming months. At the same time, the surge in novel coronavirus infection rate in France and Spain also poses a new threat to car sales.

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