The global car industry descends on Frankfurt this week to show off the latest models it hopes will fend off an economic slowdown in some of its biggest markets, as government spending cuts chip away at consumer confidence in Europe.
Carmakers are also facing slowing growth in China, now the world’s No. 1 auto market, and a major driver of surging demand for luxury cars over the last two years.
Even if the United States avoids recession, competition will intensify there as Japanese automakers battle to claw back ground lost when the March earthquake disrupted production.
Car registrations in some major European markets actually rose last month, but analysts are warning the numbers, which reflect cars bought up to two months ago, before the summer’s stock market slump, do not tell the whole story.
“Certainly from a stock market point of view, a lot has changed during that time,” said Barclays Capital analyst Michael Tyndall. “I take little comfort from good August numbers.”
European carmakers may have scrambled to increase their presence in China and other new regions but they still rely on Europe for the bulk of their sales and tough austerity measures threaten consumer spending power.