ACEA

Automobile production expanded by 5.3% in 2007

Trend toward diesel remains

Brussels, 20/02/2008 - The contribution of the European motor vehicle industry to economic growth in the EU27 has been positive and sustained through 2007. Automotive production expanded dynamically (+5.3%) and reached 19.7 million vehicles (passenger cars, trucks and buses) according to the ACEA winter Economic Report. Over 80% of the 16 million cars registered in Europe in 2007 were produced by the ACEA members. Diesel powered cars accounted for 53.3% of total new car registrations in the EU. Demand is likely to remain stable in the current year.

The European automotive industry is key to the strength and competitiveness of Europe. The car industry provides jobs to more than 2.3 million people and indirectly to another 10 million in the EU27. Europe is the world's largest vehicle producer. Of the 50 million cars produced globally, one third is manufactured in the EU.

Automobile production

In 2007, the automobile production in Europe increased by 5.3% in 2007. Passenger cars accounted for 87% of the production, an increase of 5.5% compared to 2006. A particularly solid growth was noted in the truck sector (+15%) thanks to a booming demand on the European markets. The production of light commercial vehicles also went up (+2%) whereas the production of buses declined by 24%. New EU member states posted a 25.2% growth in automotive production and accounted for 15% of total EU motor vehicle production and 17% of passenger car production by the end of 2007.

Market demand

Demand for new vehicles in Europe remained on an upward trend (+1.8%) in 2007 mainly thanks to mounting new passenger car registrations in the new member states and a continuous boom on the European commercial vehicle market. Nearly 16 million new cars were registered, 92% of which in Western Europe. Buyers’ confidence and the demand for new cars in Western Europe (+0.2%) were restrained by soaring oil prices, changes in taxes, the global credit crunch and declining purchasing power. In the new EU member states, where car density is still much lower, a steady growth was recorded throughout the year (+13.9%). Thriving European and foreign demand for new commercial vehicles resulted in a 6.8% growth in truck registrations. The European market ended the year with 7.1% more vans, 5.1% trucks over 3.5 tonnes and 4.4% more buses & coaches registered.

Demand characteristics

Of the 16 million passenger cars registered in Western Europe, 53.3% were diesel powered, 6% more than in 2006. By contrast, new registrations of petrol-powered vehicles fell by 4% to 6.9 million units. The continuous rise in demand for diesel cars is explained to a large extent by improved diesel engine technology, significant increases in fuel prices and greater consumer demand for fuel efficiency. Most of the people still buy ‘small’ and ‘lower-medium’ cars (respectively, 37.1% and 32.4% of total new registrations). The 4x4 segment saw a steady increase in demand (+22% in 2007 compared to 2006), accounting for 9.9% of new registrations in 2007 against 3.5% in 1998. Registrations of the cars emitting less than 120g of CO2 per kilometer have also risen and accounted for over 10% of the total EU new car registrations between January and October 2007.

Market forecasts

Automotive industry demand forecasts point to stagnating car registrations in 2008. New member states are likely to improve their 2007 result at a somewhat slower pace (+9%) while Western European market will possibly slightly deteriorate (-0.6%). Of the main markets, only France and Germany are expected to register more cars than last year. This will, however, not offset a decline in most of the remaining EU15 countries. 2008 started with a mild decrease (-0.3%) due to a deceleration in the EU15 (-1.6%) whereas the new member states remained dynamic (+20.1%).

Vehicles in use

In 2006, there were 251 million vehicles on the European roads according to the latest ANFAC (Spanish Automobile Association) report. The few new EU members missing in the report account for around 10 million additional cars. Passenger cars represent 88% (230 million) of all the vehicles on the European roads. The European car fleet is highly concentrated in five main markets (Germany, Italy, France, UK and Spain) and is characterised by a high diesel penetration (30%). In terms of car density, the ratio of cars to population was 0.5 in Western Europe with every second citizen owing a car. In Eastern Europe this figure is one out of five. On the mature and saturated West European market, car demand stems mainly from replacement whereas in the new EU Members there is still large room for new customers.

Economic background

The European economy remained quite dynamic in 2007 despite torments on the international financial markets. The so far healthy GDP growth rates in the EU27 and euro area (2.7% and 2.9%, respectively) are nevertheless likely to be affected in the short term by a shrinking credit availability, soaring food and oil prices and a volatile economic performance of the USA. Taking into account a negative impact of the summer 2007 credit crunch, the growth forecasts for 2008 and 2009 have been set by the European Commission at around 2.2% in the euro zone and to 2.4% in the EU27. The US (+2.2%) and Japanese (+2.1%) economies grew slower than the EU in 2007. Their economies are likely to be even less dynamic in 2008 (US 1.7%, Japan 1.9%) but are expected to recover in 2009 (US 2.6%, Japan 2.3%).

The ACEA members are BMW Group, DAF Trucks, Daimler, FIAT, Ford of Europe, General Motors Europe, MAN Nutzfahrzeuge, Porsche, PSA Peugeot Citroën, Renault, Scania, Toyota Motor Europe, Volkswagen and Volvo. They yearly invest €20 billion in R&D, or 4% of turnover.

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ACEA publishes its Economic Report three times per year: in February, June and November. For the ACEA winter 2007 Economic Report click here. For further information, please contact Joanna Smolinska, Manager Statistics & Economics at .(JavaScript must be enabled to view this email address) or + 32 2 738 73 55. Please also visit http://www.acea.be

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