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28/08/2012
WHAT'S NEEDED IS NEW IDEAS

THE CAR MARKET
The downturn in the Italian car market continued in June and the official data for the first six months confirm the need for new roads that will prevent the collapse of the entire sector

Renzo Dotti

WHAT WE HAVE BEEN WATCHING in recent months is a film that has already been written. A predictable script which, despite not coming as a surprise to anyone, still leaves a bitter taste in the mouth because of the relentless way it unfolds and the merciless figures that, month after month, testify to the collapse of a market that was kept alive only by the incentives of previous years.
With its two-figure negative percentage (-24.4%), the month of June confirmed a downturn in sales that is certain to continue in the coming months and will position the volume of sales in the Italian car market at the same level as those of the late 1970s.
The 128,388 vehicles registered brought the total for the first six months of the year to 814,179, 19.7% fewer than in the first six months of 2011 (1,014,299 vehicles). The concept can be simplified by imagining one unsold car out of every five registered last year (which also lacked electrifying results) parked in enormous lot: there would be over 200,000 vehicles that will never be bought by anyone now.

Italian or foreign, everyone loses
By taking a closer look at the table of vehicle registrations in Italy prepared by Anfia on data from the Ministry of Transport, it is easy to see that in the first six months of 2012 very few car manufacturers can boast positive figures compared to last year’s sales. And it is totally symptomatic that it is primarily the low cost vehicles (Dacia first and foremost, but also Kia, Hyundai and Chevrolet) that do not have a minus percentage for the six months of registrations. The few cars that have been sold are those that are less demanding on Italian wallets even, if not mainly, from the aspect of running costs. Positive results also for Land Rover and Jeep, vehicle manufacturers of a higher level, but their numbers are so small that they have very little effect on the total market.
Then comes the desert. A long list of negative percentages, many above 20%, others between 30% and 50%, with no distinction between Italian and foreign cars. In short, a hecatomb that will end, according to the uncomplicated forecasts by many analysts, with the closure of a huge number of dealerships, but not only. It brings to mind a statement by Sergio Marchionne, according to whom, if the negative trend does not improve in the next two or three years, Fiat will have one factory too many in Italy. Another bad blow for employment in our country. And with the economic situation we are experiencing at the moment, it is really difficult to be optimistic in this respect.

Between saying and doing …
The recession that was officially declared a few months ago, but in effect has existed in Italy for some time now, could not have any other consequences for the car sector other than that of a decline that is unlikely to guarantee more than 1,400,000 vehicle registrations by the end of 2012.
Added to these provisional data is the fact that the optimism shown by those who see the latest government manoeuvres and decisions at European level as the first steps towards economic recovery, clashes with the hard reality of the difference between “provisions for growth” and the “industrial policies” that will really bring a breath of fresh air. To date, however, this has not happened and we are a very long way from interventions that are decisively oriented towards bureaucratic simplification, reducing the cost of energy, simplifying taxation and loosening the shackles of the credit crunch.

Disillusionment
According to the operators in the sector, what the car market needs in the short-term is a shot in the arm aimed primarily at easing taxes, beginning with specific segments like low-emission cars and company cars, which will lead to the first signs of a reversal in the trend. There is no news about this to date, other than the parliamentary initiative concerning electric cars and vehicles with low CO2 emissions, a measure that Federauto, the Italian federation of car dealerships, has judged insufficient and maintains that it is counterproductive as all it will do is waste public money.
On its part, Unrae, the association that represents foreign manufacturers operating in the Italian car market, emphasizes that buying by families is being particularly hard hit by the economic situation (-23% in the six-month period, a downturn of 63%), but, for the moment, company cars (-16%) and rentals (-9%) are holding up better. In any case, it is a totally inelastic demand compared to the promotional efforts by manufacturers and dealerships and Federauto points out that the collapse in June was partly assuaged by the considerable recourse to self-registration and zero kilometres. With the result that, net of these actions, the reality of the actual figures would have been even more disastrous.
This is why it is extremely difficult to see the light at the end of the tunnel. Official ISTAT estimates show a continual downturn in consumer confidence (from 86.5 to 85.3) and an increase in those who expect unemployment to rise. A lethal grip of the vice.

Data that make you think
If it is true that with 36 million vehicles (17% of the vehicles in circulation in Europe with a population that is only about 7% of the entire continent) Italy has the highest traffic rate on the continent (excluding Luxembourg), it is improbable that, even in the unlikely event of an economic recovery, the coming years will see a return to selling two or more million vehicles with the main aim of renewing those in circulation. For the moment, our record for cars only produces record traffic congestion which, according to many experts, costs us 1% of GDP, the very GDP whose growth is being counted on by all sectors of the economy, cars included, to guarantee a future that is slightly less gloomy.

Buses, vans and trucks plummet
The slump of the Italian market includes commercial and industrial vehicles and buses. According to Acea data, in Italy the segment as a whole recorded a downturn of 42.4% in May compared with 37.9% during the first five months of the year. We are seeing a net deterioration that unequivocally indicates not only that the situation in this market is grave, but also that it will tend to deteriorate even further; it is the true mirror of the economic crisis in almost all sectors and of the enormous difficulties in terms of investment, especially by small and medium-size Italian firms in the road transport world.
The biggest downturn was for buses, with a falloff of 53.8% in May and 30.9% in the first five months. Sales of industrial vehicles fell by 43.9% (-31.9% in the first five months) and commercial vehicles of up to 3.5 tons closed May at -41.9%.

Gambling on electric cars
Without a doubt, it is a sector that is growing but still a long way from the figures needed to support the car sector as a whole. This, in brief, is the current situation of the electric car sector in Italy, a segment with many expectations (there are even those who hope that growth in the next 15 years will reach 10% of total sales) but, if we look reality in the face, it is a sector that in 2011 had only slightly more than 5,000 contracts for hybrid cars and electric cars braked at under 300. There are many unknowns, but the barrier has been broken and the offer of cars that are oriented towards the maximum reduction of consumption and emissions is the most interesting technical and, in perspective, commercial development of recent times.

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