European Car Sales Screech to a Halt With Most Showrooms Closed

(Bloomberg) --

European car sales were almost wiped out in April after governments around the continent closed auto dealerships and other businesses to slow the spread of the coronavirus.

The U.K. sold just 4,321 cars during the month, the lowest since just after the second world war, the Society of Motor Manufacturers and Traders said Tuesday. The 97% slump followed similar declines in the Covid-19 hotspots of Italy and Spain, while France fared slightly better with an 89% decline.

The economic destruction wrought by the coronavirus has been swift, broad and deep, with manufacturing seizing up across the globe and consumers increasingly stuck at home in government-imposed isolation. But with lockdown restrictions now starting to ease in some countries, automakers are looking to both drivers and government for signs that a gradual recovery may be about to get underway.

“The industry's eyes are firmly on the government's next move, with dealers watching closely for any sign of an easing of the restrictions or further support for businesses forced to close,” said James Fairclough, chief executive officer AA Cars, the used car unit of the AA.

Consumer behavior will be the next trend to watch, he added. The likelihood of automakers offering cheap deals and the possibility that some commuters will switch to cars from public transport could provide a boost, Fairclough said.

Read this: How the Pandemic Crash Compares With Slumps of the Last Century

SMMT has asked for incentives from the government to kick-start the economy, similar to a demand by automakers across Europe. Chancellor Angela Merkel is hosting a video conference on Tuesday with officials from the likes of Volkswagen AG, BMW AG and Mercedes-Benz maker Daimler AG to consider proposals to revive car sales.

Metzler analyst Juergen Pieper expects European sales to drop by about a third, given the weak economy and widespread social restrictions, and doesn't expect a sustainable recovery in demand and production before 2021.

The U.K.'s April sales were mostly through fleet orders and to some frontline workers and public services, and the SMMT now expects registrations to fall 27% for the entire year, to the lowest since 1992.

The U.K. has yet to ease any lockdown restrictions, but economies on the continent are slowly opening up. That's allowed carmakers to open dealerships and the manufacturing sites needed to supply them.

Jaguar Land Rover, the U.K.'s largest carmaker, will gradually reopen its factories starting May 18, as will PSA Group and Honda Motor Co. in the coming weeks.