Study: Auto Sales in Europe to Drop 7% This Year

Western Europe's auto industry faces the prospect of its second severe market downturn in recent years, according to AlixPartners LLC.

The Michigan-based turnaround and consulting firm expects new-car sales in Europe this year to slide by 1 million vehicles to 13.5 million units. Volume remains 3.3 million vehicles below the pre-recession levels in 2007. AlixPartners warns that the region's auto sales are unlikely to reach 16 million vehicles again before 2020.

The primary reason is consumer confidence, which is being eroded by the European debt crisis and high unemployment, the firm says. It notes that consumer spending in the EU has grown 0.3% so far this year and is expected to drop 0.5% in 2013.

AlixPartners points out the disparity in auto sales across the region: double-digit declines in Belgium, France and Italy; more moderate decreases in Germany, Spain and the U.K.; and moderate growth in Poland and Russia.

About 40% of all European plants are operating below their breakeven points the equivalent of capacity utilization of 75%-80%, the firm estimates. Plants with the lowest utilization are mainly in France, Italy, Russia, Spain and Turkey.