European car sales are sliding to a 20-year low after German concerns over the debt crisis sent demand plunging last month in the region’s biggest economy and removed the main buffer protecting automakers.
Registrations in March fell 10 percent to 1.35 million vehicles, the 18th consecutive decline, with Germany’s auto market plunging 17 percent, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today. First-quarter deliveries in the region dropped 9.7 percent to a record-low 3.1 million cars.

Volkswagen AG (VOW3), Bayerische Motoren Werke AG (BMW) and Daimler AG (DAI), which last year shrugged off Europe’s decline, are forecasting unchanged 2013 earnings as investor and consumer confidence fall in their home country. A recession stemming from the debt crisis, which reared back up last month with a rescue for Cyprus, has led to 12 percent unemployment in the 17 countries sharing the euro, the highest since records began in 1995.
“The car boom in Germany has come to an end,” said Hans- Peter Wodniok, an analyst at Fairesearch GmbH & Co. “People have stopped buying cars as consumers are much less confident of the future, especially after the latest decision on Cyprus.”
Volkswagen declined as much as 2.4 percent to 142.20 euros and was down 1.6 percent as of 12:55 p.m. in Frankfurt trading. BMW fell as much as 2.3 percent to 65.35 euros and was down 1.6 percent. Daimler was 0.9 percent lower.
IMF Forecast
The International Monetary Fund yesterday trimmed its 2013 euro-area economic forecast as a second year of contraction leaves the region’s recovery lagging behind the rest of the world. The Washington-based IMF sees the 17-country bloc shrinking 0.3 percent, compared with a 0.2 percent retreat seen in January, with France joining Spain and Italy in contracting.
European Central Bank President Mario Draghi said yesterday that while he expects a recovery in the second half, the outlook has “downside risks.”
The German car-sales drop was the steepest among Europe’s five biggest auto markets, and compared with an 11 percent fall in February. The U.K., where sales increased 5.9 percent, overtook Germany in deliveries in March, according to the ACEA. Spain, Italy and France all posted declines.
‘Disturbing’ Trend
“The western European passenger-car market is on track this year to hit levels last seen in 1993, and Germany seems to be in a free-fall,” Max Warburton, an analyst at Sanford C. Bernstein Ltd. in Singapore, wrote in a report to clients yesterday. “While unit profitability in Germany is not nearly as high as China, it’s still a critical driver of German carmakers’ earnings and the current trend is quite disturbing.”
Deliveries at Wolfsburg-based VW, the regional market leader, dropped 9.3 percent, with the namesake brand posting a 15 percent decline. BMW (BMW), the world’s biggest luxury-car producer, sold 4.7 percent fewer vehicles in Europe last month.
Daimler (DAI) posted a 1 percent European sales decline, with registrations at the two-seat Smart division dropping 16 percent and demand at Mercedes rising 0.8 percent. Daimler, which has said first-quarter profit will fall, plans to update 2013 forecasts this month once it assesses a European market that it has said shows no signs of recovery.
Recovery Chances
European sales at Paris-based PSA Peugeot Citroen (UG), the region’s second-biggest carmaker, and Dearborn, Michigan-based Ford Motor Co. (F) dropped 16 percent.
“A recovery in the second half looks a little less likely,” Stephen Odell, Ford’s European chief, said in an interview today on Bloomberg Television, adding that sales in the region after the first quarter are at the low end of the automaker’s forecast.

via Europe Car Sales Heading for 20-Year Low on German Slide – Bloomberg.