European bulls lauding the message "the worst is behind" received another dose of reality today. Data shows German car sales plunge as Europe's auto crisis deepens.
New car sales in Germany fell by more than 10 percent year-on-year in February, signaling the crisis for Europe's auto makers is deepening as recession-hit consumers curb spending. New car sales in the region dropped to a 17-year low in 2012.Gee Who Coulda Thunk?
Speaking ahead of the industry meeting in Geneva, the sales chief of General Motors' (GM.N) Opel brand said car sales for the whole of Europe might fall by as much as 10 percent this year.
Until recently, industry executives have been penciling in a decline of around 3-5 percent for Europe's car market in 2013. The market shrank 7.8 percent last year.
Germany continues to outperform markets such as France and Italy, where car registrations tumbled 12 percent and 17 percent respectively in February. German car sales fell 2.9 percent in 2012, including a 16 percent drop in December.
"Until recently, industry executives have been penciling in a decline of around 3-5 percent."
Flashback, July 09, 2012: Global Collapse In Auto Sales Coming Up.
Employee of German Manufacturer Robert Bosch RespondsOne did not have to hear from an employee of Bosch, the world's largest supplier of automotive components, to make that forecast.
Love your blog. I've written before.
I work for Robert Bosch in Germany. We make diesel injectors for common rail systems (truck and passenger car).
Our sales forecasts are again down and there is a huge crunch now to save money to try to squeeze out a profit at the end of the year. Sales are down 10% to business plan so they are looking for every dime right now.
The retiring CEO (Franz Fehrenbach...a good man) wishes for a "black 0" at the end of the year. However, I doubt that will happen.
Numerous older people have been given incentives to leave the company before official retirement age.
There are numerous closure days still planned. I would guess we can expect more.
So what you are seeing in the PMI is reality. I do not see or hear similar hints in the rest of the German economy yet......
Name Withheld by Mish
All one had to do is think. Italy and Spain were in severe recessions and France was clearly headed there (thanks in part to the nonsensical policies of French president Francois Hollande).
With that backdrop, precisely what countries were German exporters supposed to export to?
Throw Away Your Sunglasses
Don't expect much in the way of US auto exports with Europe in severe recession, and China slowing significantly.
Some forecast increasing US sales based on pent-up auto demand from kids. I see the end of the line as the US is back in recession.
There still are few jobs for kids out of college, the 2% payroll tax restoration will take a bite out of disposable income, retiring boomers don't need new cars, and changing social attitudes towards kids are such that kids do not want the debt their parents had (nor do they have the love affair with cars their parents had).
The jobless recovery is over and the future is dim enough that people can throw away their sunglasses for a lengthy spell.
Mike "Mish" Shedlock