Market Watch

Europe's Linchpin Coming Loose?

Most people recognize that saving the European Union as it currently sits will require both massive write-downs and a supreme sacrifice by the German people in order to remain together. As the divide between French and German entities grow so does the reflection in sales.


New car sales in Germany fell by more than 10 percent year-on-year in February, signaling the crisis for Europe’s auto makers is deepening as recession-hit consumers curb spending. New car sales in the region dropped to a 17-year low in 2012. Speaking ahead of the industry meeting in Geneva, the sales chief of General Motors’ (GM.N) Opel brand said car sales for the whole of Europe might fall by as much as 10 percent this year. Until recently, industry executives have been penciling in a decline of around 3-5 percent for Europe’s car market in 2013. The market shrank 7.8 percent last year. Germany continues to outperform markets such as France and Italy, where car registrations tumbled 12 percent and 17 percent respectively in February. German car sales fell 2.9 percent in 2012, including a 16 percent drop in December.

When Germans finally start to feel the pinch themselves you will see the sentiment change very quickly. Without massive write downs or the solid support from Germany, Europe’s experimental Union will unravel faster than Lindsay Lohan’s career.