FRANKFURT (MNI) – Passenger car registrations in the Eurozone,
excluding Cyprus and Malta, were down 11% on the year in June, following
May’s 13.8% dip, according to data from the European Automobile
Manufacturers’ Association (ACEA) released Thursday.

It was the third straight annual decline.

In the EU15, which includes Sweden, the United Kingdom and Denmark,
but excludes Slovakia and Slovenia, registrations dropped 7.1% on the
year.

Among major Eurozone countries, German registrations fell 32.3% in
June, reflecting the ongoing normalization of the domestic car market
following last year’s subsidy-induced buying binge.

German sales of new cars at both the wholesale and retail level are
well below their levels of early 2009, which was the height of the
country’s scrapping premium. Nominal May sales were 18.2% below March
2009’s peak and have fallen in four out of the last six months through
May of this year.

The current economic climate in Germany is not particularly
conducive to making large purchases. Although worries about unemployment
have abated given the labor market’s resilience through the crisis,
consumers are worried that Germany’s ambitious efforts to cut its budget
deficit will force higher taxes and weigh on income growth going
forward.

Looking ahead, new car registrations over 2010 as a whole could
decline by approximately 25% compared to last year’s levels, industry
association VDA recently projected.

Still, German carmakers are being underpinned by a turnaround in
exports, especially to Asia and the United States. “There is no question
that exports are currently the motor of this industry,” VDA head
Matthias Wissmann said earlier this month.

In a press release also issued Thursday, VDA said that new
passenger car registrations in China were 19.4% higher on the year in
June and were nearly 50% higher in the January-June period. The US
market saw a 14.8% increase in registrations in June and 16.8% for
January-June).

Wissmann warned, however, that German manufacturers’ 44% annual
increase in exports through the first six months of the year must be
viewed in light of the “very weak” months one year ago. The positive
export numbers will seem less impressive in the second half of the year,
Wissmann suggested, since exports started to see a turnaround in the
second half of 2009, thus boosting the base effect for future months
this year.

“We expect the German automobile industry to have at least 20% more
exports in 2010 as whole” than in 2009, Wissmann said. Such a result
would exceed the total level of exports in 2008 and would not be far
short of 2007’s record figure.

French registrations dropped 1.3% on the year in June, although
compared to the previous month, new nominal registrations rose nearly
30%. Still, prospects for the rest of the year are not promising since
the government lowered its “cash for clunkers” premium to E500 from E700
effective, July 1. It had been E1000 until January 1, 2010.

Furthermore, fundamentally unfavorable conditions for consumers in
France will likely weigh on durable-goods outlays going forward.

Among other major European economies, car registrations fell in
Italy by 19.1% on the year in May, while Spanish car registrations, were
25.6% higher on the year.

Despite some weaker domestic markets versus last year, any export
turnaround in the automotive sector should provide a needed boost to the
currency zone’s economic output, which looks to be hampered by weak
private demand in the months to come.

Data for May released Wednesday showed that industrial production
in durable goods grew by 2.4% on the month, far outpacing the headline
figure of +0.9%. It was the third straight month of growth in that
category.

Production expectations of Eurozone manufacturers have been above
the long-term average since February, according to the European
Commission’s monthly survey, providing further evidence that industrial
growth should mitigate any dip in output that would result from a
slowdown in consumer demand and public expenditures.

–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com

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