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Economy in Brief

Auto Sales In The Zone Come Back To Earth
by Robert Brusca April 2, 2010

Policymakers around the world have used the auto sector as a lever to try and pry growth out of their respective economies. It may seem strange that such a ‘big ticket item’ would be uses so universally, but that is partly the result of the type of crisis governments and central banks have been fighting. Few buy cars without bank financing. And bank financing had retracted sharply in the crisis.

Auto incentives ladened with tax breaks helped to get the sector moving ahead. Now the incentives have been removed and sales are falling back to economically supportable levels. In the e-Zone we can see that while car sales are falling back retail sales have been steadily cutting their losses. It’s not great but its progress.

France and Italy are the early auto sales (actually registrations are recorded in Europe) reporters. They each show that sales have advanced in March more than compensating for the sales drop in February. Although the drop off in overall auto sales seems severe, it is only sales getting back to normal after some very successful incentives. The reduction in the rate of decline in retail sales underscores that there is some progress on the part of the Euro-consumer. France and Italy are showing that m/m sales can still rise in this environment in which has the growth rate of Yr/Yr sales dropping so sharply.

Euro-Area Car Registrations
  Mo/Mo % 3-Mo Trend From 6-Mo Trend From 12-Mo Trend From
All Seas Adj Mar-10 Feb-10 Jan-10 Mar-10 Feb-10 Mar-10 Feb-10 Mar-10 Feb-10
  France(&WDA) 1.0% -0.2% -17.0% -50.8% -46.2% 6.2% 23.6% 12.7% 18.8%
  Italy 5.1% -2.9% -2.5% -2.0% -19.2% 11.6% 7.1% 12.2% 21.6%
base Month of Calc Feb-10 Jan-10 Dec-09 Dec-09 Nov-09 Sep-09 Aug-09 Mar-09 Feb-09
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