Government stimulus packages for the car industry in Germany and France are mitigating the downturn in those nations, according to iSuppli.
European Q1 car sales fell 16.3% in Q109 and, for the full year of 2009, are expected to fall 16.7%, says iSuppli.
However, European car sales are projected to increase in 2010 and will return to nearly the 2008 sales level by 2014.
"Because automotive is among the most important of European industries-perhaps the most important-many governments have passed stimulus packages to help stabilize their auto markets during the recession," says Egil Juliussen, principal analyst and fellow for automotive electronics at iSuppli, "the most popular stimulus is the so-called scrappage incentive that gives buyers of new cars a discount if they trade in old cars that generate more air pollution than new, cleaner vehicles."
- Germany's incentive of €2,500 for a new car started in mid January and immediately impacted sales. The nation's auto sales increased by nearly 17% in February, jumped by 40% in March and grew by another 18% in April, compared to the same months in 2008.
- France's incentive, which started in December, 2008, was €1,000 euros, so its impact was less.
- First-quarter auto sales in France declined by 3.9% compared to the same period in 2008, which is actually a relatively strong performance compared to overall double-digit decline in Europe.
- Europe is the largest auto production region in the world, and is a net exporter of autos.
- European auto production in Q109 compared to Q108 dropped by 46% in France, 33% in Germany, 40% in Italy and more than 50% in the UK.
The good news is that Q109 was most likely the bottom of the downturn for Europe and auto production declines will be smaller in the remaining quarters of 2009.
The attached figure gives more perspective on this recession and the aftermath summarizing iSuppli's estimate of the auto electronics recovery in Western Europe.
The figure shows relative yearly sales for several electronics categories compared to 2008 auto sales which have been normalized to 100. The electronics categories are head-units, in-vehicle navigation, the Advanced Driver Assist System (ADAS), embedded telematics and the Bluetooth-based hands-free interface. The sales pattern is similar for most categories, with a decline in 2009 and growth returning in the following years.
The only area to rise in 2009 will be ADAS, which will manage a slight sales increase in 2009. ADAS consists of ultrasonic and camera park assist, adaptive cruise control, lane departure warning and blind spot detection systems.
Embedded telematics system sales have remained low in Europe and are waiting for the eCall mandate to be settled. eCall is a European Union Commission initiative and will need to undergo legislative processes that would take an average of 18 months for it to become an EU regulation-once it is submitted. Due to several contentious aspects of the eCall initiative, there is not yet an agreement, even after more than two years of discussions.
Hence, it looks like the eCall initiative is unlikely to become a mandate until 2011 or possibly later. The result is that the embedded telematics market will not take off for another two or three years in Europe.
Telematics services using the driver's phone is doing better in Europe as Bluetooth-based hands-free interface systems are growing in importance. All major auto manufacturers offer such HFI systems on some or all of their models and their sales will continue to grow.