European Car Sales Bounce Back from Rock Bottom
Automotive sales have suffered across the planet, due to the global economic downturn. European automotive sales have hit rock bottom as sales dip to a two-decade low. The idea that the situation cannot possibly get any worse has altered slightly, as things suddenly started to improve in the second quarter of this year.
How can something so bad bounce back so quickly?
A sudden bounce back to sales figures seen 5 years ago is not going to happen quickly, but, overall, the rate of decline in Europe has sunk to zero. Those were the words of the Harman International Chief Executive at the IFA, when Mr Dinesh Paliwal made a speech to address Reuters’ concerns about European sales. He hopes for a zero to one percent rise next year, which is going to help keep European auto sales from damaging the company further.
The recovery seems to have already begun. The biggest carmakers in Europe are Daimler and Volkswagen, and both have already reported healthy profits during the second quarter of this year.
What does success sound like?
The manufacturers of in-car audio systems may seem like an odd place to look for recovery signals, but, their sales are often a signal of how well the automotive industry is doing. Where checking tyres and car parts manufacture may give some signals, the ordering of in-car audio equipment is done almost exclusively to put into new cars. This is because few people return to their car manufacturer in order to upgrade or change their in-car audio system.
So what signals are looking promising?
The research firm Markets and Markets claims that the audio market within the global automotive industry (only) is going to grow to almost $15 billion in 2016. That is an annual growth of 12%, which is a massive signal that the automotive industry is set to grow rapidly around the world in the next three years.
How are they getting such promising recovery signals? It is through the fact that car manufacturers are looking to produce so many cars in the near future. Few are going to release a press release saying that they are expecting stellar sales in the next few years as that would result in the commonly seen counter-intuitive stock loss; that is where people start selling their stock when a company releases an unexpectedly positive piece of PR. Many will often view it as an act of desperation to get the stock price up.
In addition, Denso and JVC-Kenwood have already received orders for in-car audio systems that span the next five years, with the order total coming to $19 billion. Harman has also received orders of $5 billion, and all of these orders are exclusively for in-car audio devices.
Sometimes an industry will not show you its true colours. Sometimes, you have to look a little further afield to see what is really going on. European automotive sales have hit rock bottom, but news from the audio manufacturers, and news from Daimler and Volkswagen show that the European automotive industry is set for a nice recovery.