After a strong first quarter, European car sales slipped in April. But sales are still expected to rise in 1998 as consumer confidence grows.
The 1.7 percent decline in April sales was caused by fewer working days due to the Easter holiday, costing the industry an estimated 130,000 sales, said Arthur Maher, an analyst with J.D. Power-LMC in London. Sales also fell because consumers rushed to register cars in March to avoid an April 1 increase of 1 to 16 percent in the German value-added tax and a new £50 first-time registration fee in Great Britain.
Unit sales fell to 1,255,500 in April, but rose 8.1 percent in the first four months to 5,077,100 vehicles, according to estimates from ACEA, the European automakers' association.
The largest decline during April in the five major markets was in Germany, where sales fell 13.9 percent. Analysts said it is too early to predict whether the German market is softening.
The decline in Germany could instead be a signal that the European automotive market has stabilized after years of national and manufacturer scrapping incentives primarily in France, Italy, Ireland and Germany. These incentives distorted the market and caused wild swings, said Maher.
The market now appears to be driven by new products, and declines in manufacturer sales reflect product changeovers or a lack of new product.
'New models will account for 25 percent of the market in 1998, the highest level in years,' said Maher. 'Market-share performance will be tied to where manufacturers are with products, whether they are new or old and if they are competitive.'
Severe drops in General Motors and Ford Motor Co. sales in April support this analysis. GM group sales fell 18.0 percent last month, and Opel/Vauxhall sales were down 20.0 percent, the sharpest decline of any maker in April.
The company's biggest seller, the Opel/Vauxhall Astra, is being replaced and production is still ramping up. GM executives said Astra demand is higher than the factories can produce, even working overtime. GM has 225,000 unfilled orders for the Astra in Germany alone, said David Herman, chairman of the German subsidiary Adam Opel AG. 'We are doing everything we can to fill them. Our dealers say they have never experienced anything like this in the company's recent history.'
Ford group sales fell 14.8 percent and the Ford brand declined 15.2 percent in April. A Ford spokesman said Escort sales have substantially weakened. The Escort will be replaced this fall by the Focus and is no longer competitive with the new Astra and the fourth-generation Volkswagen Golf.
BMW Group sales show similar trends. The replacement 3 series was launched in March and demand is high. BMW brand sales were down 19.3 percent in April.
Rover brand sales fell 5.3 percent and are not expected to recover until next year. Other than the Land Rover Freelander, Rover will have no new vehicles until the 600 and 800 models are replaced in 1999.