Brexit drags European car sales to weakest first quarter in five years

European car sales turned in their weakest performance in the first quarter since an industrywide contraction five years ago, as UK consumers’ apprehension over Brexit eroded demand in the region’s second-largest market.

First-quarter registrations edged up 0.6 per cent, according to figures released Wednesday by the Brussels-based European Automobile Manufacturers’ Association, or ACEA.

The gain was the slowest since the second quarter of 2013, when the region was in the throes of a recession. A 5.2 per cent downturn in March, led by drops in three of the five biggest markets - Germany, the UK, and Italy - suggests that “momentum is starting to slow, the ACEA said.

Auto sales dropped in March at eight of the 10 top-selling carmaking groups in Europe, with the steepest declines at Ford, Fiat Chrysler, BMW and Nissan.

The slide has been particularly acute in the UK, where car sales were down 16 per cent in March and 12 per cent for the quarter. Part of that can be blamed on extreme winter weather and an increase in vehicle taxes that took effect in April 2017 and led to a spate of purchases last March.

But the regional economy is also bogging down, with consumer spending in Britain declining in February and March, according to credit-card provider Visa.

In addition, economic gauges in the euro area have missed estimates amid trade disputes with the US Also hurting sentiment is lack of an agreement between the European Union and the UK on how the country’s pullout from the trade bloc should proceed, making businesses unwilling to plan on expansion or hiring.

This has lowered the confidence of car buyers, while the pound’s decline against the euro has “reduced the scope for manufacturers to entice consumers with strong offers” in the UK by cutting profit on any deals, Ian Plummer, manufacturing and agency director for new and used-car listing site Auto Trader, said in an email.

In Europe’s biggest automotive market, two German research institutes posted figures Tuesday indicating a slide in investor confidence and a rising risk of recession.

The weakening in Europe’s largest economy is partly tied to the trade tensions between the EU and the US. – Bloomberg