Analysts forecast a drop in automobile sales in Europe this year

Article by Christian A., on January 1, 2012

PricewaterhouseCoopers is predicting that vehicle sales in Europe will drop by around 4 percent to approximately 13 million units in 2012 from this year's estimated 13.5 million. This would be the fifth consecutive decline from the 2007 peak of around 16 million units. In addition, Citigroup Inc. forecasts that economy in Europe will be narrowed by 1.2 percent next year.

Meanwhile, the Organization for Economic Cooperation and Development warned last month that the region poses "serious downside risks" to worldwide growth.

Renault, Fiat and PSA/Peugeot-Citroen will suffer the most due to their heavy reliance on European sales, analyst Arndt Ellinghorst at London-based Credit Suisse commented.

According to Bloomberg data, PSA posted 73 percent of revenue in Western Europe in 2010. Renault earned 70 percent of its sales on the continent while Fiat earned 70 percent. Ellinghorst also warned that Fiat and PSA are possibly most at risk next year because they are "too exposed" to European markets, their balance sheets are "already stretched" and they do not have the "strongest product momentum."

Arne Ericsson, deputy regional chief at the Nordic region's largest dealership chain Bilia Personbilar AB, revealed that vehicle orders started slipping in mid-November. He added that customers are "hesitating more" and the sales process takes a longer time.

Topics: europe, sales

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