Car Sales Pick Up In May, Hinting at Tentative Recovery for Europe’s Automakers

An employee mounts a wheel on a Mercedes Benz A Class on the assembly line at the Daimler AG factory in Rastatt, Germany, on Feb. 4, 2019. Thomas Kienzle/AFP via Getty Images

Europe’s automotive sector, a key pillar of the continent’s economic and social well-being, is showing some signs of recovery after taking a dramatic hit from the pandemic.

French automotive sector group CCFA said in a news release Monday that new car registrations in May picked up following a deep year-over-year 89 percent plunge in April. The numbers for May are 50 percent down compared to the same month last year, suggesting that as lockdowns ease in Europe, new car purchases are seeing a tentative rebound.

The group said there were 96,310 new car registrations in May 2020, compared to 193,948 in May 2019, while May 19 saw 7,000 registrations, which the CCFA called “almost pre-crisis levels.”

Also showing some improvement was new car registrations in Spain, according to Bloomberg, which followed a similar dynamic to those in France, with May figures showing a year-over-year drop, but less severe than in April.

An employee mounts a wheel on a Mercedes Benz GLA Class on the assembly line at the Daimler AG factory in Rastatt, southwestern Germany, on Feb. 4, 2019. Thomas Kienzle / AFP via Getty Images

The hint of green shoots in the French automotive market, along with hopes they spread across the continent, comes after European passenger car sales dropped to a record low in April.

New car registrations in April dropped by 76.3 percent to 292,182 vehicles in the European Union, Britain, and the European Free Trade Association (EFTA) countries, statistics from the European Auto Industry Association (ACEA) showed.

“The first full month with COVID-19 restrictions in place resulted in the strongest monthly drop in car demand since records began,” ACEA said in a statement. The associated added that while each of the 27 European Union markets saw double-digit drops in April, the worst-hit were Italy and Spain, the two European countries most strongly impacted by the pandemic.

Spain suffered the biggest losses, with car registrations falling by 97.6 percent in April, year-on-year, while Italy saw a 96.5 percent drop.

“The number one priority of the industry is to re-launch the market, thereby enabling production to resume at manufacturing sites across the EU,” said ACEA Director General Eric-Mark Huitema in a statement, adding that representatives of the auto sector were calling for an ambitious recovery plan.

“Given the near-total collapse in sales, it will be crucial to provide a strong market stimulus to enable vehicle makers to fully re-open production facilities and keep people in jobs,” he said.

A robot mounts a windshield on a Mercedes Benz A Class on the assembly line at the Daimler AG factory in Rastatt, Germany, on Feb. 4, 2019. Thomas Kienzle/AFP via Getty Images

Steps being called for to support the relaunch of the industry include harmonized guidance on preventive health and safety measures in the workplace to avoid future disruption to supply chains, as well as relief for companies, including tax breaks, direct state aid, investment guarantees, and low-interest-rate loans.

Despite some encouraging signs in Europe’s automotive industry, the ACEA says the sector faces an uncertain future.

“The economic and social impact of the COVID-19 crisis on the automotive sector is particularly severe. Workers, although supported by short-time work arrangements, have seen their incomes reduced, and companies are facing cash drains as their revenues have disappeared,” the association said in a statement.

“Currently, there is little visibility on what the future holds. If this situation persists, the sector risks a meltdown with large-scale bankruptcies and restructuring,” it added.

According to the ACEA, Europe’s automotive sector indirectly provides employment to some 13.8 million workers. The sector also accounts for some 20 percent of industrial research funding in Europe, the association said.