Ford, GM suffer steep declines as crisis for automakers worsens

2012 European car sales lowest since 1995

Ford, GM suffer steep declines as crisis for automakers worsens

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New-car registrations in Europe plunged by 16 percent in December as all volume automakers except Hyundai and Kia suffered falling sales. The drop was the steepest decline recorded for the month since 2008, industry association ACEA said today.

Registrations in the EU plus Iceland, Norway and Switzerland dropped to 838,428 vehicles last month from 997,842 a year earlier. Full-year sales declined 7.8 percent to 12.5 million cars, the lowest level since 1995.

The figures highlight the crisis that automakers face in Europe, as recessions in the southern part of the region cut demand and austerity measures in many countries raise unemployment levels.

Ford Motor Co. and General Motors Co.'s Opel and Chevrolet led the December decline, with European sales at both U.S. automakers falling 27 percent. Renault and Dacia sales were down 19 percent, while rival PSA/Peugeot-Citroen saw volume fall nearly 19 percent. Fiat Group sales dropped by 18 percent.

Volkswagen Group, the region's biggest carmaker, suffered a 14.5 percent decline, led by a 20 percent drop at the VW brand. The group's Audi division saw volume drop by 18 percent.

Download PDF below for December and full-year registrations by brand and country.

Hyundai and Kia were the only bright spot. The Korean brands have made a name for themselves with attractively designed affordable cars sold with long warranties. Hyundai sales rose 9 percent while sales at sister brand Kia increased 6 percent.

UK overtakes France

Most major European markets recorded a double-digit downturn in December with Spain falling 23 percent, Italy down 22.5 percent, Germany down 16 percent and France 15 percent.

For the full year the UK market was the only major market to expand with registrations up 5 percent to a four-year high of 2 million. The UK overtook France to become Europe's second-largest automotive market after Germany.

UK car sales were helped by self-registrations, aggressive discounting and a wide range of financing deals allowing drivers to pay a fixed monthly cost, eliminating the risk of buying a car outright. "We haven't seen the levels of discounting we've seen in 2012 for quite some time," said John Leech, KPMG's UK head of automotive.

Paul Everitt, chief executive of UK auto industry body SMMT, said "pent-up demand" also helped British sales as habitual new car buyers who had stayed out of the market for the past few years began returning to the showrooms. However, demand for new cars last year remained down about 15 percent from pre-recession, 2007 levels. The SMMT expects demand to be broadly stable in 2013 in a "challenging" market.

Germany limited its full-year decline to 3 percent. Registrations were down 20 percent in Italy, 14 percent in France and 13 percent in Spain.

Further decline in 2013

Demand for cars in Europe is set to fall for a sixth consecutive year in 2013. Market forecaster LMC Automotive recently estimated a 3.1 percent drop in western European sales to 11.4 million vehicles this year, compared with levels of around 12.8 million and 13 million in 2011 and 2010, respectively.

Fiat CEO Sergio Marchionne told reporters at the Detroit auto show on Monday that volume producers together probably lost 5 billion euros ($6.7 billion) in Europe in 2012, and carmakers must find a "solution" to restore earnings in the region.

GM reaffirmed at the Detroit show that it expects the European auto market to contract about 4 percent and show pricing pressure this year, although the company expects a modest share gain. CEO Dan Akerson said a worry was that Germany might slip into recession.

Commenting today on the ACEA numbers, Michael Tyndall, an analyst at Barclays, said: "The concern is that German, Spanish and U.K. consumer confidence is slipping away. Before we get too excited about stabilization in demand, we need to see consumers in those key markets to start to feel a bit happier."

Peter Fuss, senior advisory partner at Ernst & Young's Global Automotive Center, said: "The actual decline is much worse than the statistics would have us believe, as sales figures for the year were artificially inflated as a result of self-registrations by dealers and automakers, especially in the region's biggest market, Germany."

Fuss added: "Further, to prevent a freefall in sales, automakers and dealers offered record discounts, which are likely to put a lot of pressure on their margins."

Reuters and Bloomberg contributed to this report

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