New-car sales in Europe could return to a “more or less” normal level in July as measures to reduce the spread of coronavirus are relaxed, according to Kia Europe’s chief operating officer. Before then, registrations will be down steeply — with volumes for April “catastrophic,” Emilio Herrera said.
Registrations in the European Union will be down 75 percent to 80 percent in April, Herrera told Automotive News Europe in an interview.
The fall in sales is likely to be less severe at 50 percent in May as dealerships in major markets begin to resume sales, he said.
Most European government ordered dealerships to close through April as part of lockdowns to limit the spread of the COVID-19 pandemic. Showrooms in Germany were allowed to reopen on April 21. Italian dealerships will restart sales on May 4. Dealerships in France will resume sales on May 11.
In June Herrera expects the year-on-year decline to be 25 percent.
The decline in registrations could be reduced if governments introduce incentives programs to encourage owners to scrap older vehicles for new ones, Herrera said.
“We need to put in place scrappage plans like in 2009,” Herrera said in a separate interview with Reuters.
Potential stimulus plans should help cut carbon pollution, but also incentivize customers to buy all categories of car, not just electric and hybrid vehicles, he said.
“Electrified cars are much more expensive than combustion-engined vehicles,” Herrera said “If we want to stimulate demand now, we need to help the low income people who are first going to lose their job.
To entice reticent customers back into showrooms, Kia plans to offer insurance in Europe which protects buyers from having to make monthly payments on a new vehicle if they lose their job.
The program which costs 15 euros to 20 euros a month, will allow new-car buyers to delay monthly payments until they are rehired.
Kia saw its European registrations decline 14 percent in the first quarter because of disruptions sparked by the coronavirus crisis. “If governments don’t decide on subsidies soon, “the second quarter will be even worse,” Herrera said.
The automaker resumed output of its Ceed compact car and Sportage SUV at its only European plant in Zilina, Slovakia, on April 6 after a two-week stoppage.
The plant is currently working on two shifts instead of the normal three but it stopped again for a few days last week because of low demand, Herrera said.
Reuters and Bloomberg contributed to this report