Boston, MA -- (ReleaseWire) -- 01/29/2014 -- In 2013, we forecast passenger car sales to increase 10.0% on the back of modest improvements in private consumption, price cuts from car sellers, and pent-up demand. This bullish outlook for the UK stands in stark contrast to our view on the European passenger car market. Indeed, passenger car sales in much of Europe, particularly the large markets in Western Europe, have declined sharply in 2013, and we expect to see sustained declines in many markets over the year.
We believe that much of the increase in the UK market has been driven by private sales. BMI maintains a fairly bullish outlook on consumer confidence in the UK, but we believe that the main driver of growth in the market was large pent-up demand and heavy discounting by auto companies.
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Passenger car sales in the UK fell almost every year between 2006 and 2011, and the average age of cars on the road increased markedly. We believe this created a large level of pent up demand, and was the key driver of the 5.3% increase in the market in 2012. We believe this effect is continuing in 2013.
BMI maintains a relatively bullish forecast for vehicle production in the UK, particularly compared with output levels in many other European countries. This view has been informed by our positive outlook for the domestic passenger car segment and our expectation of a slowdown in the decline in the European passenger car segment. We expect commercial vehicle production to decline over the year, however, but this constitutes a relatively small proportion of total vehicle output.
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