EU Car Sales Crash 57% In May As Europe Grapples With Massive Inventory Glut

Tyler Durden's Photo
by Tyler Durden
Friday, Jun 19, 2020 - 02:45 AM

New car sales in the EU plunged in May, falling 57% to 623,812, as Europe grapples with the same problem that the U.S. has had for weeks: a glut of inventory, despite re-opening some factories and re-starting production in certain areas.

All 27 EU member states posted double digit declines in new car sales, with the U.K. falling an astounding 89%, according to MarketWatch

Production coming out of the EU remains "well blow" pre-crisis levels but the lack of demand continues to contribute to a growing inventory problem. This, in turn, has created a slowdown in an industry that's already moving at a crawl to begin with. Jobs and profits are both threatened from the glut, in addition to the monumental threat they both still continue to face from the ongoing global pandemic.

Unsold cars on dealer lots are "at least 30% above normal" according to industry analysts, while unsold inventory in Germany alone was about $17 billion worth. 

Antje Woltermann, managing director of the ZDK industry group: "Unsold stocks are climbing, and on the other hand vehicles are not leaving the lots."

While Europe is struggling, many have looked to China, where sales were up 6% in May, for signs of optimism. For example, Stephan Wöllenstein, chief executive of Volkswagen Group China said: "The return of these kinds of figures is encouraging and gives us continued cautious optimism going forward." 

But those numbers don't account for the recent second wave of lockdowns, including in Beijing, that China now faces. 

Countries like France and Germany continues to try and spur sales with government incentives, but Germany is focusing primarily on EVs while the glut is in traditional ICE cars.

Recall, in May, we were ahead of the curve when we noted that European car registrations had plunged 76% in April. According to the European Automobile Manufacturers Association, the number of new cars sold fell from 1,143,046 to just 270,682 YOY in that month. 

The ACEA said at the time: “The first full month with COVID-19 restrictions in place resulted in the strongest monthly drop in car demand since records began.” 

It looks as though that trend has continued through May. 

April's numbers were worst than March, though May's registration numbers seem to show that there could be some respite for sales when those numbers are released.