VW price cuts help slow Europe sales drop in June
Ford, Fiat, Opel hit hardest by 9th straight month of decline
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(Bloomberg) -- European car sales fell at the slowest rate in eight months as price cuts by Volkswagen Group helped counter the effects of the region's sovereign-debt crisis and rising unemployment.
Registrations in the 27-member EU states plus Switzerland, Norway and Iceland fell 1.7 percent to 1.25 million vehicles in June, the ninth consecutive month of decline, industry association ACEA said Tuesday in a statement. Six-month sales in the EU and EFTA countries dropped 6.3 percent to 6.9 million, down from 7.36 million in 2011, ACEA said.
"We see large rebates in the German market," including price cuts of about 24 percent on Volksagen's Golf, Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen, said by phone. VW is set to unveil a new version of the model, which is Europe's top-selling vehicle, later this year. Sales at VW Group, the region's largest carmaker, rose 4.3 percent to 300,858 in June.
Carmakers' "large" rebates in Germany, which averaged 11.9 percent in June, are "a clear sign of market weakness," Dudenhoeffer wrote in a June report on auto pricing. "The uncertainties about the debt crisis in southern Europe are causing private car purchasing to stall."
ACEA forecast on June 6 that industry sales in Europe would shrink 7 percent, which would be the lowest level since 1995 and 21 percent below the 2007 peak.
Renault, France's second-biggest automaker, said on June 11 that it doesn't expect Europe's car market to match 2007 figures until 2018. The company is still planning to increase deliveries globally because of growth outside the region and the introduction of new models. Renault's European sales in June declined 3.7 percent to 114,964 cars, leading to a 17 percent six-month drop.
Ford, Fiat, others stumble
Ford, Fiat, Opel and PSA/Peugeot-Citroen were among carmakers hit hardest last month as car sales in Europe continued to drop amid a sovereign-debt crisis in the region that is deterring consumers from making large purchases.
Of the major automakers, Ford had the biggest drop in new-car registrations last month, with a 17.4 percent decline to 85,465.
Sales of Fiat Group vehicles, which are heavily dependent on European markets, fell 16.5 percent to 456,191 cars. Fiat will shut a plant, its second such move after closing a factory on the island of Sicily in 2011, unless the carmaker can come up with an economically viable plan to use excess capacity to build cars for North America, CEO Sergio Marchionne said July 3.
There was further bad news for GM's European unit Opel/Vauxhall as sales fell 12.2 percent last month to 90,300. On Thursday, the U.S. automaker announced the departure of Opel CEO Karl-Friedrich Stracke amid major restructuring plans at the money-losing carmaker.
Sales at PSA, Europe's second-biggest carmaker, fell 8.3 percent to 151,868, as the automaker said it plans to cut up to 14,000 jobs and shut a French plant, the country's first auto-factory closure in two decades.
Meanwhile, demand for BMW Group vehicles remained static, rising just 0.3 percent to 82,519. Sales of Daimler's Mercedes-Benz and Smart vehicles dropped 4.4 percent in the same period to 64,466.
Hyundai sales topped Nissan in June, making it the second best-selling Asian brand in Europe behind Toyota. Hyundai's June sales grew 23 percent to 44,803 units, ahead of Nissan at 44,170 units, up 10 percent. Sales at Kia rose 25.8 percent to 33,699.
In the first half, Nissan still leads on Hyundai 238,604 units versus 232,454.
Netherlands replaces Spain as top 5 market
Among the five biggest European markets, Italy's June sales fell 24.4 percent to 128,388, while France's dropped 0.6 percent to 208,909. Registrations increased 2.9 percent in Germany to 296,722 and rose by 3.5 percent in the UK to 189,514.
Thanks to strong monthly growth, with sales up 52 percent to 76,813 units, the Netherlands replaced Spain as Europe's fifth-largest market. Spain has traditionally been part of Europe's top five markets, a position it maintains in first-half sales.
"You've got the double whammy effect of macro uncertainty combined with dislocation of the market from prior scrappage incentives, as well as the general uncertainty over the solvency of the mass makers, namely Peugeot and Fiat," David Arnold, a London-based specialist salesman at Credit Suisse, said before the figures were released. "Things will only get worse in the second half."
In a note to investors on Tuesday, Morgan Stanley wrote: "There is no sign of an incremental deterioration in June, western EU seasonally adjusted annual rate was sequentially flat, coming in at 1,20 million versus 1,21 million in May. The key question now is whether we will see incremental deterioration in the second half."
Experts say that another factor hurting car sales is that the crisis is hitting entry-level buyer hardest. "The rising youth unemployment (23 percent across the EU) represents a consumer segment that is not likely to be able to afford vehicles for some time in the future," Peter Fuss, senior partner at Ernst & Young's Global Automotive Center, said in statement.
David Jolley, Luca Ciferri contributed
