Europe car market slump reverse

Growth of 2% forecast for Europe car market

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BRUSSELS (Bloomberg) -- Europe's car market will probably expand 2 percent this year as demand gradually recovers from a two-decade low, the region's main auto-industry group, ACEA, said.

Sales in the region, which have dropped for six consecutive years, will not return to pre-crisis levels in the "foreseeable future," ACEA President Philippe Varin said at a press conference Tuesday at the group's Brussels headquarters.

Industrywide deliveries in the EU will probably increase to "just above" 12 million vehicles from about 11.8 million cars in 2013, said Varin, who is also CEO of PSA/Peugeot-Citroen.

He said sales had been almost 16 million in 2007.

Delivery gains in December show that "the market may now clearly be bottoming out," Varin said. "We are hopeful that this year will herald the transition toward a recovery."

Varin said he expects the German and French markets to recover after declines of 4.2 percent and 5.7 percent respectively and Britain to be in good shape after 10.8 percent growth in 2013.

Spain, with a 3.3 percent rise, is also recovering, while Italy should bottom out after a 7.1 percent drop.

Carmakers including Renault and Ford Motor Co. are predicting a gradual revival in European demand, though growth will hinge on economic activity in France, Spain and Italy, which rank among the top five national car markets in the region.

Closing factories

Ford, PSA and General Motors Co. are among carmakers shutting plants in Europe and scaling back workforces in response to the auto market's decline.

German producers of luxury vehicles such as Daimler's Mercedes-Benz and BMW kept their regional market share steady or increased it as demand remained stronger for high-end models than for mass-market vehicles.

Car plants in Europe operated at an average 75 percent of capacity last year, Varin said.

Authorities in the region should try to set rules bolstering a recovery in production, such as increasing labor flexibility or providing EU social funds to help automakers reorganize, he said.

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