Forecast: Brexit Will Hinder Sales Growth in Europe

Growth in European demand for cars and light trucks, excluding Russia, will slow from 10% in 2015 to 6% this year and 2% in 2017, LMC Automotive predicts. The firm predicts average growth of 2% per year through 2021.

Sales volume in the region will rise from 17.3 million units in 2015 to 18.6 million in 2017, according to Justin Cox, LMC’s U.K.-based head of European production forecasting. He notes that France, Italy and Spain are contributing 75% of this year’s domestic sales growth.

Cox tells attendees at last week’s LMC outlook conference in suburban Detroit that the U.K.’s decision to leave the European Unit is likely to result in 1.2 million “lost” sales between 2016 and 2021, thanks to an average 2% decline in demand for British output through 2021. LMC estimates average growth in Russia and the rest of Europe will be 10% and 3%, respectively, over the same period.

Europe's vehicle exports (primarily to the Americas and Asia) have climbed fairly steadily from around 400,000 units in 2011 to nearly 700,000 this year. Surging demand in China has offset slowing export growth in North America.

Production in the region will show the same softening, LMC says. It forecasts that growth will slow from 7% (to 196 million units) last year to 4% (to 20.3 million) this year and only 1% (to 20.5 million) in 2017.

The Russian car market, which began shrinking in the first quarter of 2013, has plunged 50% since then to 1.4 million units. But LMC says demand appears to have hit bottom. Cox expects sales in the country to climb 7% to 15 million units in 2017.