Europe’s auto makers are heading for a major decline in sales 2010, according to a new study published on Friday, January 1, which forecast that nearly a million fewer cars will be sold in western Europe this year compared to 2009.

"The auto world is re-adjusting itself and that will result in major changes for production sites", said a study published by automobile industry expert Ferdinand Dudenhoeffer of the University of Duisburg-Essen.

Despite the financial crisis, 2009 was the sixth best year for sales worldwide, thanks to car scrapping schemes and government-sponsored economic rescue packages.

According to the study, 52.8 million cars were sold in 2009, 5.4 percent fewer than the previous year. Germany bucked the trend with 3.8 million cars being sold, a 24-percent increase on the same period a year ago. In western Europe, the number of sales also rose significantly.

In other countries, it was a different story: sales in North America fell by 22 percent to 12.5 million cars. The Russian car industry was hit by slumping sales of around 44 percent. Similar figures were registered by Japan, Canada, Spain and the United Kingdom.

Market changes ahead

Dudenhoeffer estimates that 2010 will see a fundamental shift in markets. The worldwide market will develop positively. Global demand is expected to rise 4.3 percent to 55 million vehicles – mainly thanks to gains in the markets in the USA, China, Russia and India.

In western Europe, however, nearly a million fewer cars will be sold in 2010, a drop of seven percent.

"In particular, the strong artificial push from the 'cash for clunkers' program in Germany is responsible", said Dudenhoeffer. "Germany will now pull western Europe down".

Germany's car-scrapping bonus entitled car owners to trade in cars older than nine years old for a 2,500 euro ($3,500) bonus towards a newer, fuel efficient vehicle. The program, which cost roughly five billion euros, not only proved a welcome shock absorber but in fact provided a boost to the industry which had taken a battering from the global economic meltdown.

Some 3.8 million cars were sold in 2009, posting a 25 percent growth in sales, according to figures released by the VDA automotive industry federation.

However, the car trade-in scheme not only benefited German carmakers but importers of motor vehicles as well. They were able to increase their market share in Germany from one third to over 40 percent.

Small is big

According to the head of Germany’s VDA automotive industry association, Matthias Wissmann, German automakers will hold and further expand their position globally even as competition in the global auto industry intensifies.

"At the same time we are attacking in the small car segment, with cars that only use about 3 liters of fuel for 100 kilometers (62 miles)," Wissmann told French daily Les Echos in an interview published on Thursday.

Wissmann said that he expected the German auto market to normalize in 2010, with up to 3 million new registrations – only slightly lower than the multi-year domestic average.

With three out of four cars built in Germany being made for export, German auto makers are expected to follow closely developments on the international market.

"If BAIC buys GM's unit Saab, and another Chinese company buys Ford's Volvo, then that is a sign that the balance is shifting in the global auto market," he said, referring to recent market developments.

As China overtook the United States as the world's biggest auto market, Beijing Automotive Industrial Holding Corp (BAIC) agreed to pay about 140 million euros for the technology of General Motors' Swedish Saab subsidiary, and US rival Ford is nearing an agreement to sell Volvo to China's Geely.

"Nobody can rest on what has been achieved so far," Wissmann said.

nrt/rb/Reuters/AFP/AP/dpa
Editor: Toma Tasovac