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Gloomy forecast for Europe's car sales

The Paris Motor Show opens to the media

The Paris Motor Show opens to the media on Friday with European car sales in their fifth gloomy year and a “dramatic decrease” forecast. (Sept. 26, 2012) Photo Credit: Bloomberg

Europe's carmakers could be forgiven for worrying that the slogan for this year's Paris Auto Show, "The Future, Now," is a threat of more hardship to come rather than a promise of prosperous times.

Across the region, car sales are in their fifth straight year of decline, and lots and factories are filling up with unsold cars. According to analysts at PwC's Autofacts industry forecasting arm, car sales in Europe are expected to drop 5 percent to 12.5 million units this year. Meanwhile, executives estimate factories have the capacity to build 20 percent more cars than they are able to sell.

The most recent data from Europe's carmakers' association ACEA show new passenger car registrations dropped 8.9 percent in August, for the 11th consecutive monthly decline.

They're down 7.1 percent over the first eight months of the year and certain to continue the unabated drop that began in 2008 for another year at least.

This year, mass-market automakers Fiat, Peugeot-Citroen PSA, General Motors' Adam Opel, and Renault have all reported losses.

Eight out of Europe's top 10 car markets will see "dramatic decreases" in sales this year, according to auto industry consultants Alix Partners in a June report.

Fiat and Chrysler chief executive Sergio Marchionne has warned that unless automakers are allowed to close unproductive factories, one or more automakers will fail in the medium to long term.

But he argues the issue can't be solved on a national level and has urged European officials to provide a "concerted road map" for the auto industry to close idled plants.

At the show, which has its media preview Thursday, France's Renault will unveil the new Clio IV, the latest iteration of its top-selling small car. French competitor Peugeot will show a small crossover concept car, called the 2008, designed to take on the Clio.

Other new models are the new Jaguar F-type sports car and McLaren's P1 supercar.

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