European car industry is booming

21st September 2015

As the Chinese economy slows there was concern that the global motor industry could go into recession. China accounts for 26.4% of worldwide vehicle production and are the world’s largest purchaser of vehicles at just under 20 million a year. No doubt if the Chinese economy collapses, major car companies could face a difficult time. Jaguar Land Rover has invested heavily in the Chinese market with recent investment in car plants totalled at £1.1bn, however recently they have seen a steep fall in sales of 29% for the first 8 months of 2015.

A strong European market

Europe is emerging stronger in the post recession period as August 2015 marks the 24th month of continuous car industry growth. New car registrations rose 11.5% in August compared with the same period last year. Growth is expected to continue into 2016 with Carlos Ghosn, chief executive of France’s Renault SA, expecting a 2% increase for the entirety of 2016.

There still remains pessimism amongst industry leaders surrounding the actual strength of the market in Europe and the overall numbers disguising the fragile health of car purchases. The UK market is dominated by dealerships purchasing new cars which warp the sales figures for the actual number of consumer bought vehicles. Of all the European countries it’s the weaker economies that are experiencing the highest growth. Spain, Italy and Portugal are all experiencing a high increase in the demand of smaller hatchback cars which thrive in urban markets.

USA is also performing

Despite Europe’s strong performance many large motoring firms are still losing money in the continent. The saving grace for companies such as Ford, is the resilient market of the USA. The country has seen a reliable and meteoric rise in sales over the past few years compared against the rest of the world. Motor sales in August were up 300,000 from August last year. The reason for the US growth outstretching its European counterparts is mostly down the type of vehicle sold. In Europe demand for smaller, economical and affordable cars results in firms having smaller profit margins, meanwhile, the US market demands larger SUV and pickups which typically sell for a much higher price.

What it means for car owners?

Whilst the effects on the average UK car owners will be relatively unnoticed for now it could result in a rise in price for future models. Car manufacturers looking to turn a profit in 2016 know they have to begin to steer consumers to the more expensive model lines. Ultimately if the buyer’s market does not shift, it could force the hand of manufactures to increase the price of small hatchbacks.

Looking to buy a new vehicle this year? Which model would you choose?

Leave your opinion in the comments section below:

Car insurance due for renewal? We compare over 30 of the UK’s leading providers so you don’t have to.

Call us today and receive £200 of FREE benefits with your policy.

The Call Wiser guide to Holiday Car Hire

Hiring a car abroad can be an essential part of many holidays, providing a convenient means of getting to your destination, getting out and about and exploring the local area.

To make sure that you’re not caught out this summer, Call Wiser has prepared this useful guide to holiday car hire. Read more...

Summer Driving Tips to help you keep cool behind the wheel

Rising temperatures and extra holiday traffic can put extra demand on your journeys at this time of year. However, a little planning and preparation can go a long way to help keep your stress levels under control and your vehicle moving. Read more...

It's better to talk:

Call from a mobile
0333 003 3270

Or FREE from a landline
0800 298 2190

Call Wiser is a trading name of Be Wiser Insurance Services Ltd. Registered in England No. 6097813. Be Wiser Insurance Services Ltd are Authorised and Regulated by the Financial Conduct Authority 465471

Call Wiser, Riverside House, 35-37 Bridge St, Andover, Hampshire, SP10 1BE, 0333 003 3270,