Dutch car sales to hit near half-century low, state warns

Buyers shifting from car as status symbol while global unrest also threatens growth

Dutch finance minister Jeroen Dijsselbloem: said the growth figures were “hopeful but the recovery is still fragile”

Dutch finance minister Jeroen Dijsselbloem: said the growth figures were “hopeful but the recovery is still fragile”

Wed, Aug 20, 2014, 01:00

New car sales in the Netherlands will hit a 45-year low this year, the industry said yesterday, as the Dutch government was warned any worsening of unrest in Ukraine or the Middle East could end hopes of fragile economic growth in 2015.

The auto industry consultancy group Aumacon revised downwards its previous 2014 sales forecast from 415,000 to 318,000, considerably lower than the annual average of 478,000 vehicles sold over the past decade and the high of 612,000 driven out of forecourts in 1999.

Aumacon’s director, Clem Dickmann, said the industry had been hit by continuing consumer pessimism about the slow rate of economic recovery.

He said this had combined with a dramatic post-crisis change in attitudes towards the car as a status symbol and even as an essential mode of transport.

He pointed out that while luxury models accounted for three out of every 10 cars sold in neighbouring Belgium, in the Netherlands they did not feature at all in the top 10 best-selling cars.

He expected the shift towards smaller, more economical models to continue indefinitely.

As car dealers struggle with the worst year many have experienced, the national economic think tank CPB added to the gloom by warning that any worsening of global unrest, particularly in Ukraine or the Middle East, could all but cancel modest growth forecast for next year.

Ongoing turmoil

If the turmoil in those two areas remained the same as today, the Dutch economy would grow by 1.25 per cent in 2015, in line with its forecast in June.

However, any deterioration could slash that growth to between 0.25and 0.5 per cent.

Taking the best-case scenario that growth remains in line with those June forecasts, finance minister Jeroen Dijsselbloem – also president of the Eurogroup of euro zone finance ministers – said the figures were “hopeful, but the recovery is still fragile”.

Spending plans

In a bid to add short-term momentum, the coalition parties – Mark Rutte’s Liberals and junior partner Labour – have been meeting opposition leaders this week to agree outline spending plans for next month’s 2015 budget.

There is already an unusual consensus that tax cuts to increase the spending power of middle-income families should be the post-austerity focus of the budget package.

Alexander Pechtold, the leader of the centre-left D66 party, which is performing well in opinion polls, said that cuts were essential. “They would be good for the economy – and good for jobs.”

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