Western European Car Sales Jump 15% in October—Forecast

Western European car sales rose by around 15% year-on-year (y/y) in October to approximately 1.20 million vehicles, according to IHS Global Insight forecast data. This is the largest percentage rise in the region all year and the fourth straight month of y/y gains. However, October is also the first month to witness the effect of the extremely low base comparison months of 2008, as the financial crisis began to unfold across the region—October 2008 was down on the same month in 2007 by 15%. Nevertheless, the Seasonally Adjusted Annualised Run-Rate (SAAR) reached its highest all year and at 14.8 million units, closer to the seasonal average over the last five years than at any stage in this tumultuous year. Indeed, year to date (YTD) car sales across the region are now down just 3% at 11.5 million units. To underline how far the industry has come under the stimuli injected by various state governments across the region, it is worth remembering that after the first quarter, even operating under some incentives, Western European car sales were down 16%.

Western European SAAR Graph

Outlook and Implications

October represents the largest statistical rise all year, indeed for many years, but this must be measured against the fact that in October 2008 Western Europe car sales fell 15% y/y, or nearly 200,000 units, and is therefore a flattering base comparison month and it would be dangerous to read too much into the rise. In comparison to October 2007, sales last month were 120,000 units down on the 1.32 million registered then. In addition, with many West European markets still operating under temporary incentives underpinning demand, the actual state of the market is very difficult to read. With the base comparison effect coming into play, the more reliable indicator is the five year average, but all of this still has to consider the post incentive environment looming in 2010.