Analysts: European Car production May Be Higher than Expected

After experiencing 31 per cent growth in the first quarter of 2010, market analysts are predicting that second quarter car production could have increased by as much 10 per cent for the second quarter and may increase 20 per cent for the first half as a whole. Current estimates suggest European production will increase 3 per cent in the second quarter.

The Deutsche Bank analysts base their projections on discussions “with a few suppliers and in light of Valeo’s indication for their second quarter revenues.” With this in mind, they suggest that this stronger production could be explained by an increase of exports outside Europe (benefiting from a weaker Euro) offsetting a weak European demand. “Thus, if European production is increasing by an estimated 10per cent (Europe represents approx 65 per cent of sales of our auto part universe) and if North America rebounds strongly too, by an estimated 62 per cent (approximately 15 per cent of sales of our universe), most of the suppliers of our sector should record a strong second quarter, especially since leaders are gaining significant market share,” the analysts wrote in a published 4 June.

However there was also a word of caution, “with a reversing of European car demand, [the] current favourable situation will partly reverse in the second half.”

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