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European car sales increase for longest period in four years

Elisabeth Behrmann

European car sales rose 4.3 percent in June as demand at Renault SA’s budget Dacia division and Volkswagen AG’s Seat nameplate contributed to the longest stretch of monthly delivery gains in four years.

Registrations increased to 1.23 million vehicles from 1.18 million a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today. That marked 10 consecutive months of growth, matching an expansion from June 2009 through March 2010. Sales surged 32 percent at Dacia, helped by a revamped Duster sport-utility vehicle, and 13 percent at Seat, which is widening its Leon compact lineup.

The European Central Bank unveiled a range of measures in June to encourage private spending in the countries sharing the euro a year after a recession ended. Euro-zone unemployment in May was 11.6 percent, compared with record 12 percent rates last year. Consumer confidence in Germany and the U.K., Europe’s two biggest car markets, increased in June, according to research company GfK SE.

“The stronger this confidence turns out to be” across Europe, “the better for the auto sector,” Marc-Rene Tonn, an analyst at M.M. Warburg in Hamburg, said by phone. Even so, recovery from the debt crisis “has been timid, so we’ll see to what extent negative events will have an impact on consumers.”

Spanish jump

The ACEA compiles figures from the 28 European Union countries, excluding Malta, as well as from Switzerland, Norway and Iceland. Car sales in Spain jumped 24 percent, the biggest increase among Europe’s five largest auto markets, as the country recovers from a debt crisis. Deliveries in Greece and Portugal, where governments have also imposed austerity measures to stabilize public finances, surged 41 percent and 24 percent, respectively. U.K. registrations rose 6.2 percent.

Europe’s car market is recovering from a two-decade low reached in 2013, and sales are being stoked by rebates.
“After a six-year slump in the European car market, an inconsistent and heavily incentivized recovery is better than no recovery at all,” Allan Rushforth, head of European operations for Seoul-based Hyundai Motor Co., said in an e-mail. “The dilemma for carmakers now is how they pursue future sales” amid pricing pressure.

Rebates ease

While rebates in Germany’s auto market, the region’s biggest, eased from peak levels a year ago, they remain at historically high levels of 11.4 percent off the recommended price on average, trade publication Autohaus PulsSchlag reported. Registrations in Germany fell 1.9 percent in June, held back by fewer working days.

“You have to tread carefully with price cuts because buyers get used to them,” said Frank Biller, an analyst at LBBW in Stuttgart, Germany. “Once you’ve discounted, it’s only really possible to raise prices again when there are new models being introduced to the market.”

Group sales by Boulogne-Billancourt, France-based Renault, Europe’s third-biggest carmaker, rose 24 percent in June, including a 21 percent jump at the namesake brand. New models adding to demand include the Captur crossover and Dacia’s Sandero hatchback. Renault raised its full-year European auto- market forecast this month, predicting growth of 3 percent to 4 percent instead of a 2 percent to 3 percent gain.

VW Passat

Volkswagen, Europe’s largest automaker and the second- biggest worldwide, sold 2.5 percent more cars in the region. Gains of 13 percent at both Seat and Skoda and a 1.4 percent increase at the premium Audi brand offset a 2.8 percent drop at the namesake VW marque.

Seat added a station wagon variant of the Leon car in late 2013, while Skoda, which outlined plans in January to introduce a new or revised model every six months until 2016, is benefiting from the latest version of its Octavia small car.

VW unveiled a revamped Passat earlier this month in an effort to reclaim the best-selling sedan’s lead in the European segment from Bayerische Motoren Werke AG’s 3-Series. The Wolfsburg, Germany-based parent company plans to cut costs and boost productivity at the brand by 5 billion euros ($6.8 billion) by 2017 to lift sagging profitability.
Combined European sales by General Motors Co.’s twin Opel and Vauxhall marques rose 12 percent in June, as the Mokka compact SUV and Corsa small car won buyers. Ruesselsheim, Germany-based Opel, targeting a market share of 8 percent in Europe, is revamping its lineup with 27 new or updated models through 2018 in a bid to overtake Ford Motor Co. as Europe’s second-biggest automotive nameplate, after VW.

BMW Coupe

BMW, the world’s luxury-car market leader, sold 4.5 percent more autos in Europe groupwide last month as the namesake brand’s 7.6 percent gain more than made up for a 6.9 percent drop in the Mini nameplate. Sales of the 2-Series coupe, available since March, and the up-market 5-Series sedan helped boost the BMW nameplate’s deliveries. The Mini lineup is being updated. European deliveries by Stuttgart-based Mercedes-Benz increased 1.1 percent.

Manufacturers posting European sales drops last month included Paris-based PSA Peugeot Citroen, with a 0.2 percent decline; Dearborn, Michigan-based Ford, which sold 0.9 percent fewer cars; and Hyundai, with a 4.9 percent slide.

Peugeot, Europe’s second-biggest carmaker, said separately today that its global first-half deliveries increased 5.5 percent, its first gain for the period in three years, as demand in China jumped 28 percent.

With a turnaround program bringing some early results, “we need to remain focused on executing our road map, as the external environment is still unstable, particularly in Europe, Latin America and Russia,” Peugeot Chief Executive Officer Carlos Tavares said in a statement. [Bloomberg]

 

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