Global Economics

Unsold Cars Pile Up in Europe


As purchases decline, carmakers are resorting to extreme measures to store unsold vehicles—including stashing them on an empty cargo ship

Faced with a shortage of storage space, Japanese car manufacturer Toyota is currently hiring a ship in the Swedish port of Malmo to store thousands of unsold cars the depressed EU market does not seem to want.

"It's an emergency measure that we had to take due to storage space issues," Toyota press spokeswoman Anne Gaublomme told EUobserver.

The decision to store 2,500 cars aboard a vessel owned by car transporting specialists Wallenius Wilhelmsen was made last month when the Malmo port facility reached its limit of 12,000 cars.

"We hope to keep the time of this measure as short as possible, as we are continuously adapting our production level," said Ms Gaublomme.

Robert Minton-Taylor of Norwegian-owned Wallenius Wilhelmsen said the company was approached by Toyota regarding storage but that he didn't expect much future development in the area.

"We are happy to oblige because obviously it's good business, but also secondly [Toyota] have been a long-standing customer of our company," he said.

Car sales have seen a huge slump in recent months as worried consumers put off any major fresh expenses. Exacerbating the situation, production-cutting measures such as reduced working hours can take several weeks to produce an effect, leading to the current backlog of unsold cars.

New figures released by the European Statistics Office on Tuesday (24 February) showed December industrial orders for the EU27 down 6.4 percent on the month before.

Toyota currently has European car production plants in France, the UK, Czech Republic, Russia and Turkey.

The shipping storage manoeuvre appears unique to Toyota, but a number of its competitors around the world have also resorted to unusual locations.

Chrysler is currently using the Downsview military base in Ontario to store cars, according to news website Canada.com.

Car scrapping schemes

While one part of the automobile sector is forced to take extreme action, another is experiencing an unlikely upturn in some countries.

A number of EU member states, in particular Austria, France Germany, and Spain, have introduced car scrapping schemes in a bid to boost dwindling sales of new models.

"We have got more work at the moment than we have had for five years," said Volker Muller, manager of Berlin scrapyard Auto-Ferch, according to reports in the Financial Times earlier this month.

The German scheme offers €2,500 to consumers who scrap an old car at least nine years old and purchase a new model.

However, Scrap Yard SI, a Spanish company based in Malaga, told EUobserver that business had not improved despite the introduction of similar measures by the Spanish government.

The Czech EU presidency has called on the European Commission to draft EU-wide guidelines, fearing individual measures may distort the internal market.

Czech deputy prime minister Alexandr Vondra called on the commission earlier this month "to come up immediately with a proposal on how to encourage, in a co-ordinated manner, a European car-fleet renewal."

So far, the commission has resisted such plans, saying the matter should be dealt with on a national basis.

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