Automakers, analysts disagree on when Europe's sales will finally rebound

Automakers and analysts disagree on when European passenger car sales will finally rebound from a six-year slump. Ford Motor Co. and Daimler see signs that the bottom will be reached this year.

"We're not predicting any upturn yet, but there are certainly some good indications," Ford of Europe CEO Stephen Odell said last month. "Our prediction would be that we're at or close to the trough."

Daimler said falling demand "seems to have bottomed out in western Europe." The second half likely will bring gradual improvement, the company said during its second-half results presentation last month.

Renault-Nissan CEO Carlos Ghosn is not as optimistic. The European car market will be stable at best in 2014 and 2015, he said, adding: "More realistically, we may see another decrease -- maybe not as violent or as deep as the ones we have seen for the last years."

Rising unemployment will continue to sap consumer demand, Ghosn said. "I am preparing Renault for several years of market stability – at best," he said.

Restructuring specialists at AlixPartners predict that western European sales will not recover during this decade. The company's forecast shows western European sales falling to 12 million in 2014 from 13.2 million last year and remaining flat until the end of 2019.

The reasons are unemployment, reduced spending power and a lack of consumer confidence. "Flat is the new up," said Stefano Aversa, co-president of AlixPartners. "The good news is that the decline will stop but the bad news is that it will not get better anytime soon."

Car sales in western Europe have fallen by almost a quarter since a record 16 million high in 2007. The start of Europe's sales decline coincided with the 2008 collapse of Lehman Brothers.

Government-funded car incentives helped in some countries during 2009 and 2010, but the overall market has been on a steady decline as the global downturn was followed by Europe's debt crisis, which has led to fewer sales of cars resulting in vehicle plant closures and massive job losses.

De-motorization

Not everyone sees a bleak future for European car sales. Financial analysts at Morgan Stanley, which also include light commercial vehicles in their predictions, see western Europe sales growing 4 percent next year to 13.1 million. That's the same level as 2012 and up from the company's full-year 2013 prediction of 12.6 million units.

Market analysts at IHS Automotive predict a steady recovery for Europe starting in 2014, with sales in the EU plus Iceland, Switzerland and Norway rising from 12.1 million this year to 14.8 million by 2020, which is still 1.2 million below the 2007 peak.

"Europe's recovery will be slow. In our forecasts that extend until 2020 we do not see the market even nearing the 2007 peak," said Carlos da Silva, IHS's forecast manager for European light vehicle sales. Based on da Silva's analysis, car demand has "reached a ceiling" and the combination of an aging population and a smaller pool of new drivers will result in a "slow de-motorization" in western Europe.