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13/12/2012
LOOKING AHEAD

THE CAR MARKET

An analysis of a 360-degree panorama that does more than reel off cold statistics that decree 2012 as the most negative for Italy’s automotive market in recent years

Renzo Dotti

THIS TIME I will attempt to be ahead of the game and forecast how 2012, an annus horribilis for the domestic car market, will close, with only the latest Anfia data for October to hand. It was another month with no positive surprises and the umpteenth predictable and significant downturn, but it has aroused faint optimism in some qualified analysts.

One example in particular: based on a slowdown in plummeting registrations, from an average of over  20.5% in the first nine months of 2012 to just over 12.4% in October, the study centre Promotor GL Events, which specializes in preparing and processing data about the automotive world, picked up some very timid positive signs which, when combined with indicators, prompt reflections that are less bleak than usual.

Small, almost imperceptible signs - company and consumer confidence has ceased to nosedive and the climate of sector operator confidence has not worsened, for example -  not of recovery or even market stabilization, but the glimmer of daylight. Signs to cling to so that everything does not seem to be totally black.


Hopes and fears

But it is not even remotely possible for slender hope to hide the uncertainties that persist in an Italian market with approximately 1,400,000 registered vehicles by year end - a long way from the 1,700,000 of last year and even incomparable with the 2,500,000 of just 5 years ago, a figure that now seems almost unreal but, irrespective of the current recession, one that even then did not convey the real size of the demand, also in the light of the speculation bubble that was about to burst.

Today it is a fact that the sector is suffering greatly from all points of view and that there is a serious risk that all players in the supply chain will undergo significant downsizing. During this year, one dealership closed every day and 150 jobs were lost every week in the distribution system alone. The other links in the chain, such as components and spares, are also beginning to suffer, albeit less acutely than the car sales segment, and will close 2012 with a significant downturn in revenues and expected heavy repercussions for employment.


Everything is affected by the crisis 

One thing is now evident: the collapse in sales of new cars in Italy, which means that those already in circulation are ageing, has been unable to guarantee a steady demand for repairs and maintenance. This demonstrates once again that the serious economic situation is indisputably the protagonist of our times and is capable of having an increasingly profound effect on most of what we buy, especially durable goods, but not only.

Manufacturers do not skimp on promotional, and sometimes astonishing, actions with undeniably frequent offers of new models with even more technology and intrinsic value. Paradoxically, this would be the best time to buy a new car. But, in the end, harsh reality prevails. ”I should change my car, but it’s running fine at the moment so I think that it would be better to wait a little longer” is a comment heard  with ever-increasing frequency.

If we add to this the proverbial last straw that broke the camel’s back, in order words the increase in fiscal pressure to which all Italian families are being subjected, it is obvious that the block on buying durable goods can only be reinforced, with the danger that the postponement of all initiatives until better times will become a commandment.


Requests on deaf ears

Anyone who dares to think that the recovery of the car market is just around the corner is a dreamer: expensive fuel, expensive insurance, difficult access to credit, an overdose of taxes and, as has been repeated frequently, the tough situation of the real economy are obstacles that offer no way out. 

However, the car world does not intend to give up and constantly reminds institutions of the need to intervene on the structural problems of a manufacturing industry, the jewel in the crown of which has always been the automotive sector, with measures like fiscal reform and reduced energy costs that will encourage investment or at least prevent the situation from becoming even worse.

The signs to be grabbed onto should at least be an attempt to stabilize the situation. Personally-speaking, I am increasingly convinced that we are going through a change in epoch and the result of what is commonly known as a crisis will be very slow but profound change in the way we see, appreciate and want things.  Cars included.


• 
October in brief

In October, the Italian car market again closed with a downturn of 12.,4% or 116,875 registrations. The total from the beginning of the year stands at 1,207,860 registrations, 19.7% lower than in the same period of 2011. Although less than at the start of the year, it is the eleventh consecutive two-figure downturn, with registration levels slightly below those of October 1995. Compared to 2007, almost 44% of the market has been lost in the last 5 years.

According to the preliminary data for registrations by fuel type, the only positive results for the month were for alternative fuels and the used car market. In the former case, LPG-fuelled cars registered in October were 12.5% of the total compared to 3.7% one year ago, whereas methane has a market share is 4.3% compared to 2.6% a year ago. Penetration by hybrid vehicles is Increasing slightly: 0.7% in October 2012 against 0.3% in October 2011. With regard to the used market, after thirteen consecutive  months of downturns it has shown a recovery.  With 407,005 changes of ownership gross of temporary transfers to dealerships, October closed at +8.2%. But in the first ten months of 2012, the downturn was 9.7% compared to the same period last year, with a total of 3,426,613 changes of ownership gross of temporary transfers to dealerships.


• And 2013?

Nobody has a crystal ball so it interesting to report the prospects for the world car market in 2013 as forecast by Moody’s, one of the major market study and analysis centres. In its “Global auto industry outlook”, the famous rating agency revised its forecast for demand growth to 2.9% from 4.5% of the previous forecast. Moody's maintains that, faced with a lack of recovery in sales, more manufacturers will begin restructuring to cope with overcapacity in Europe. However, any restructuring efforts will be positive for companies on the Old Continent if they lead to a reduction of capacity and costs to sustainable levels of demand and plant utilization rates of at least 90%. Sales in Europe are in fact expected to drop by 3% in the first 6 months of 2013 compared to 2012, and the agency considers that once again Italy will be one of the weakest markets on the Old Continent next year.

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