European Auto Industry Posts Gains on Economic Growth, Weak Euro

20 April 2015 Dashboard Insights Blog

Demand for new passenger cars in the European Unions increased nearly 11% in March 2015 compared to March 2014, according to the European Automobile Manufacturers Association (ACEA). This marks the nineteenth consecutive month of gains in the European auto industry.  For the full first quarter of 2015, new car registrations increased by 8.6%. Automakers Volkswagen, PSA Peugeot Citroen, and Fiat Chrysler Automobiles have all posted increasing share prices year to date.

The European auto industry increases have been fueled by the economic recovery in Europe and a weak euro. The dollar recently traded near a 12-year high against the euro, and has gained approximately 20% percent during the past yearAccording to Eurostat, the statistical office of the European Union, the unemployment rate was 11.3% in February 2015. This is the lowest rate recorded in the euro area since May 2012.

How will this impact the U.S. auto industry? Some analysts anticipate stronger car exports from EU and Japanese automakers to the U.S., driven by the relatively strong dollar. Others predict the stronger dollar will aid auto importers. There may be stronger demand from European zone customers as spending increases in the EU.  Some companies may even expand subsidiary operations in Europe on the wave of the economic recovery.  However, U.S. exports to Europe are also likely to face price and margin pressures abroad. Overall, U.S. auto sales rose by 0.5% for the thirteenth straight month in March.  The industry will continue to closely watch the impact of the global economy during the second quarter of 2015.

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