European Automotive Market Review 2011
Developments in Web traffic, Online Advertising and Sales in Europe's Big 5 Markets
Paul Rutishauser, for sophus3
The following is a summary of a presentation made to the sophus3 forum in London on the 15th of March.
Overall traffic levels went up by 11% across the 'Big 5' in 2011. This suggests a further recovery compared to the +0.2% recorded in 2009-10. There was strong growth in Germany which would be expected, given the strength of their car market (visits were up +14%). More surprising was the growth in Spain (+24%) and Italy (+18%). This may partly be the continuing penetration of domestic broadband but also a consequence of the economic downturn: more people having involuntary leisure time to surf the Internet - a 'costless' entertainment.
Car brand advertising
Germany was the only market with an increase in automotive campaign activity. Elsewhere brands were hesitant to spend in a sluggish vehicle market. (These calculation are based on 'card rates', which, if as reported are strengthening, suggests activity may have reduced even more.) On-line display (banner ads.) declined in popularity in all markets with the exception of Spain.
The European vehicle market remained becalmed. Decline in EU registrations has been continuous since 2007 (from 16 million to 13.6 million units). Spain was most badly affected: the 2011 total the lowest since 1993 and 50% down on the peak of 2002-4. Italy was down 30% against 2007 and the UK lost 25% on 2002-4.
France was performing slightly better, sustaining registrations at a similar level to 2000-2011. Germany remained the beacon of hope, recording 9% growth in 2011 (although still 9% less than in the pre-recession year of 2006).
'A' segment (city cars) was the weakest in 2011 – probably due to the continuing 'saturation' effect of scrappage schemes, plus life-cycle changes to key products (Twingo, Aygo, 107, C1, Panda all in 'run out' during the year).
Tentative signs of growth in the fleet market saw C2 and D2 compact executives revive.
A heavily restructured SUV segment continues to defy pronouncements of its demise – possibly assisted by the extreme winter conditions at the beginning of the year.
The problem clearly remains the state of the economy: high unemployment, austerity programmes, inflation and falling disposable incomes combining to reduce demand for 'big ticket' purchases such as cars.
There seems to be a widespread belief that the economy is turning a corner, that things must 'inevitably' improve as the economic cycle moves on. The problem is that the European economy and banking system have gone through a profound dislocation which has yet to be fully understood. One likely outcome is that the casual availability of consumer credit may be a thing of the past - if so it is hard to imagine that the car market can ever return to the heady levels of the early 'noughties'. The industry may be at the start of a period of painful adaptation to a market which has permanently contracted, and where new thinking, products and financial mechanisms must be devised - a period of 'reflective dislocation' - before it can prosper again.