Europe's biggest market joins France, Italy and Spain in posting monthly gain

German car sales rise 7% in January

Europe's biggest market joins France, Italy and Spain in posting monthly gain

Private buyers, as seen here in a dealer lot near Munich, drove higher car sales in Germany.

Photo credit: Reuters
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MUNICH -- New-car sales in Germany rose 7 percent in January as Europe's biggest market joined France, Italy and Spain in reporting higher year-on-year registrations for the month.

The sales increases added to signs that Europe's auto market may turn a corner in 2014 after a six-year slump.

Registrations in Germany increased to 206,000 last month compared with January 2013, the VDIK importers association said on Tuesday. It was the third monthly gain in the past four months and the strongest monthly percentage gain since an 8 percent increase to 280,700 vehicles in September 2011.

However, industry executives and analysts warned that underlying demand may not be robust as Germany's growth was in part attributable to generous price discounts.

"Incentives are the name of the game," said Ernst-Robert Nouvertne, who runs two Volkswagen dealerships near Cologne. "Headline sales are looking good but profit per car is crumbling. The [German] market is still pretty strained."

Sales growth may have even been higher as January included one working day less than a year ago, the VDA industry association said.

"It's pleasant to see that the stabilization of the German market is continuing at the start of 2014 but we should remain only cautiously optimistic," Matthias Wissmann, VDA president, said on Tuesday, noting that last month's gain is helped by the low level of sales a year earlier.

Registrations in Germany may rise for the first time in three years this year to about 3 million cars, from 2.95 million last year, the VDA said on Dec. 3, citing a recovery that took hold last summer.

France, Spain and Italy

In France, new registrations edged up 0.5 percent to 125,477 cars last month, industry association CCFA said on Monday. The CCFA forecast stable or slightly higher car sales in the country this year.

Sales in Italy rose 3 percent to 117,802 vehicles, according to the country's transport ministry.

While the figure suggested that the Italian market may be turning a corner, industry groups urged caution, saying that part of the increase was attributable to car owners finally replacing old vehicles after deferring purchases during the financial crisis.

"In absolute terms, sales of passenger cars [in Italy] remain at levels last seen in the late 1970s," automotive research group Centro Studi Promotor said in a note.

Sales of new cars in Spain increased 7.6 percent last month to 53,436 vehicles, car manufacturers' association Anfac said, helped by government scrappage subsidies.

'Right direction'

"The European car market is beginning to slowly head in the right direction," said Jonathon Poskitt, head of European forecasting for LMC Automotive.

Western European sales will grow 3 percent to 11.85 million vehicles this year, LMC predicts.

Reuters contributed to this report

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