German auto body raises 2010 outlook despite October drop

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German auto federation VDA said Tuesday that 2010 domestic new car sales should top 2.9 million vehicles but the slightly upgraded forecast still signaled a sharp drop from 2009.

The federation's anticipated loss of some 23 percent from last year in the biggest European auto market marked a sharp contrast with booming sales in emerging economies like Brazil, China and India.

In October, new car registrations in Germany fell for the 11th consecutive month, transport ministry data showed, though the 20 percent annualised decline to 256,775 vehicles was less pronounced than earlier this year.

The figure showed German sales essentially back at their level of October 2008 but marked improvement from drops of between 27 and 34 percent seen from March through August.

French figures showed October sales falling by 18.7 percent on a 12-month basis, the sixth decline in as many months.

Data from Spain revealed a slump of 37.6 percent, taking sales there down to levels seen in the 1990s.

Another mature auto market, Japan, reported Monday that October new car sales had dropped by 26.7 percent after subsidies for environmentally friendly autos expired.

Across Europe, a key factor in the slump of 12-month comparisons was also the end of government subsidies to support the auto sector at the height of the economic crisis.

In 2009, German cash-for-clunker susbsidies boosted domestic sales despite a sharp economic downturn and the sector has struggled this year in comparison.

VDA president Martin Wissmann said Tuesday however that "the German auto industry is pulling out of the crisis faster than we expected.

"We can thus raise our outlook for the domestic market," where VDA had previously expected sales of between 2.8 and 2.9 million vehicles.

German car specialist Stefan Bratzel from the University of Applied Sciences in Bergisch Gladbach near Cologne pointed to "a much better economy than in most other countries and reduced unemployment" as key factors for the revision.

Willi Dietz from the German Institut for Automobilwirtschaft at Nuertingen University said: "The private segment is weak but the business registration, rentals and so on, is very strong."

Corporate fleet renewals have underpinned sales of premium cars like Audis, BMWs and Mercedes-Benz, he noted.

For 2011, the two experts are pencilling in German sales of 3.1-3.2 million autos.

Meanwhile, VDA forecasts an increase of 21 percent in exports this year and a gain of at least 10 percent in overall production, even though October exports gained a mere three percent while output slipped one percent lower.

Rising exports have boosted shares in leading German automakers and stock in BMW and Volkswagen has leapt ahead of others on the Frankfurt stock exchange's DAX index with gains of more than 60 percent this year.

VW aims to overtake Toyota as the world's leading automaker, a target both Bratzel and Dietz termed "ambitious" but possible.

Bratzel said VW had to gain market share in the United States where local factories must make sports utility vehicles that are "a bit larger without losing their VW genetic code" that dotes them with better fuel efficiency.

Dietz pointed to India, saying that if VW is successful in that growing market where its Japanese ally Suzuki is particularly well positioned "I think they will beat Toyota."

To stay ahead, Dietz noted Toyota would have to strengthen its positions in Brazil and especially in China, where it faces historical resistance.

"The question is can Toyota overcome the cultural barrier which is deeply rooted in the history of both nations," he said.

© 2010 AFP

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