VW To Be Crushed By Brexit

VW is by far the largest seller of cars in the EU. It has nearly 25% of the market. As the region’s economy will almost certainly slow, so will VW’s sales

The trouble for VW’s sales gets added to its diesel emission scandal, which its admits will cost it $18 billion. The scandal has also hurt VW’s reputation, and triggered investigations including one of its former CEO.

According to the European Automobile Manufacturers’ Association’s (ACEA):

In May 2016, the European passenger car market saw strong growth for the 33rd consecutive month. Registrations during the month grew by 16.0% compared to May 2015, reaching 1,288,220 units.

VW did not keep pace. It May unit sales were up 9.1% to 309,708. However, the was primarily due to an increase in Audi sales, up 21.1% to 73,009 and Skoda, up 15.3% to 56,483. Sales of the VW flagship brand were higher by only 4.1% to 143,303. The overall market share of VW fell to 24% in May from 25.5% last year. Rivals PSA Group, maker of Peugeot, rose 18.7% to 135,442, and sales of Renault Group rose 28.7% to 137,102.

Much like the U.S., car sales in the EU have surged for over 3 years. However, sales were deeply wounded during the recession. In the first quarter of 2009, they fell 17.2%

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Brexit is expected to slaughter cars sales in the U.K. According to the FT’s motor industry correspondent Peter Campbell:

Demand for new cars in the UK may fall by a fifth if the country enters a recession, a City analyst has warned in the first reaction from the automotive industry to a likely Brexit vote.

Appetite for new cars falls by 20 per cent in a “typical” downturn, Stuart Pearson, an analyst at Exane BNP Paribas, wrote in an early morning note to clients

Many analysts believe that the economic effects of Brexit will be just as bad for the EU as the U.K. If so, VW, the largest car company in the region, will take a terrible beating

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