The bleak state of the automobile market in Europe may not seem so obvious due to a sales practice called “self-registration,” which involves dealerships purchasing their own vehicles to boost sales, painting a false picture of demand.
As reported by Craig Trudell and Keith Naughton of Automotive News, three out of every 10 new vehicles in Germany in the last eight months, including luxury BMWs and Mercedes, were not sold to customers, but to carmakers and their dealers. Eventually, the dealers sell the cars as used vehicles at big discounts.
Executives at General Motors and Ford Motor warn that price discounting numbers are reaching “scary” levels and exhibit the desperate state of Europe’s automobile industry. Susan Docherty, head of GM’s Chevrolet Europe subsidiary, said Fiat and PSA/Peugeot-Citroen are offering discounts of as much as 30%-off gross sale prices on vehicles.
“Nobody can make money in Europe when you’ve got incentives at that level,” she said at the Paris Motor Show. “In the past, countries have been able to stimulate the industry through scrappage programs. The countries are in such a state that they don’t have the ability to pull those levers. We’re not seeing any quick fixes to this.”
Ford Motor has seen the largest decline in European car sales in the last six months. Roelant de Waard, vice president of marketing, sales and service at Ford of Europe, said that Ford is trying to limit its participation in self-registrations as it attempts to protect profit margins.
Although de Waard did not comment on Ford’s margin targets or how the company plans to adjust its factory capacity to declining demand, he did predict that the European auto market could potentially see recovery in 2014.