Domestic car sales in Europe graph

Business focus: Russian turbulence hits European car market

Leading car makers have suspended sales in Russia as economic sanctions bite, but the UK market remains strong. Elsewhere, a Swiss-based power group strengthens its foothold in Japan.

European automotive manufacturers are gearing up for growth in 2015, with some UK car makers looking to add models and create new jobs. But while demand for new cars in Britain is expected to be healthy, problems in the Eurozone and the economic slowdown in Russia are likely to have some impact on the wider industry.

In Britain, the signs are that 2014 will have seen the highest new car registrations for a decade. The Society for Motor Manufacturers and Traders (SMMT) has predicted that vehicle production will continue to grow as new models are launched in 2015 and beyond.

Bentley has said it is planning to launch its first SUV model in 2016. This and the development of other new models is expected to boost employment at its Crewe plant. Meanwhile, Aston Martin has confirmed that it will create extra jobs as it injects more investment into its Gaydon facility. The company has not disclosed plans for new models. But Reuters reported last month that it understood the company was considering the possible development of an SUV, a luxury saloon and hybrid vehicles.

Aston has a partnership with Daimler, which supplies it with Mercedes engines and other technology. Daimler has said it might also share its own SUV production expertise with the British company.

Separately, BMW, the owner of the Mini and Rolls-Royce marques, said it was confident of selling more than two million vehicles by the end of 2014 – which would be an all-time record for the German company. However, BMW has warned that the current lack of stability in the European economic climate could bring new challenges for it in 2015.

Indeed, the lack of growth across the Eurozone has hit car sales on the Continent, particularly in the major markets of Germany and France, according to figures from the European Automobile Manufacturers' Association (ACEA). The economic sanctions against Russia are also causing problems. Companies, including Jaguar, Land Rover, Audi, General Motors and Renault-Nissan, were said to be suspending sales in Russia just before Christmas. R-N's boss Carlos Ghosn warned that car makers could face an economic 'bloodbath' in the country.

Russia still holds its position as Europe's third largest market for domestic car sales – although this could change. For the January to November 2014 period, Germany sold around 2.8 million cars and the UK 2.3 million, according to ACEA/SMMT figures. Available figures for Russia from the Association of European Businesses (AEB) show sales of 2.2 million, but this includes sales of light commercial vehicles (LCV), which are not stripped out. In the 11-month period, Russia saw an 11.6 per cent fall in car/LCV sales compared with the same period in 2013 – a situation that can only worsen, with knock-on effects for the rest of Europe. 

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