VDA Expects Global Car Market to Grow Despite European Woes

By Nico Schmidt

German auto industry association VDA expects the global car market to grow both this year and in 2013 despite anemic demand in Europe, where high unemployment and tough measures to tackle the region's debt crisis are weighing on consumer confidence.

"The global passenger car market remains on course for growth in 2012 - the decline in Western Europe can be more than offset through strong gains in other regions," VDA president Matthias Wissmann said in an interview.

Worldwide, the car market is expected to rise around 4% this year compared with 2011 to around 68 million vehicles, driven by demand in China and North America.

Mr. Wissmann said he doesn't expect the European car market to experience a sharp downturn similar to 2008-09, when demand tanked in the aftermath of the financial crisis. But new-car sales in Europe are expected to decline around 7% year-on-year to almost 12 million vehicles in 2012.

"The global car market will increase next year as well, but probably at a lower pace [than in 2012]," Mr. Wissmann said. Demand in the troubled European market is expected to be flat next year.

Several car makers, including PSA Peugeot-Citroen SA (UG.FR) and General Motors Co.'s (GM) Opel unit, are posting steep losses amid cut-throat competition in Europe, where the industry is squeezed by over-capacity. Comments from industry executives on how to address this issue will be in the spotlight at the Paris auto show that starts Wednesday.

-Write to Nico Schmidt at [e-mail]

(Christoph Rauwald contributed to this article)