German car market slows as France, Spain, Italy continue recovery

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PARIS (Reuters) -- French, Spanish and Italian car sales rose in June while the German market slowed down, held back by fewer working days than a year ago.

Sales in Germany declined 2 percent to 277,600 last month but adjusted for work days, car sales rose slightly, the VDA industry association said.

French registrations grew 3 percent in the month, while in Italy vehicle sales were up 4 percent. In Spain, sales surged 24 percent.

In Germany, the VDA reaffirmed its outlook for a slight improvement in car sales this year. June contained one less working day than the same month last year due to the Pentecost and Corpus Christi holidays, the latter of which is celebrated only in parts of the country, a VDA spokeswoman said.

"Germany's auto-market recovery remains intact," said Hanover-based NordLB analyst Frank Schwope. "The holiday factor weighed on June results."

Six-month German sales are up  2 percent to 1.54 million autos.

French caution

The rise in French registrations brought first half gains to 3 percent, the Paris-based CCFA carmakers' association said. The CCFA raised its full-year growth forecast for the French market to 2 percent from earlier expectations that the market would be flat this year.

"Taking account of the current economic realities we nonetheless maintain a certain prudence about the passenger car market in 2014," association head Patrick Blain told reporters on Tuesday.

Renault posted a 25-percent gain in domestic sales last month on the strength of demand for its Captur subcompact crossover and the Dacia Duster.

Rival PSA/Peugeot-Citroen's deliveries fell 2 percent, weighed down by a 9 percent decline at Citroen. Ford Motor, General Motors, Toyota and Volkswagen also lost ground. But French demand for luxury cars picked up, with BMW and Daimler recording gains of 25 and 17 percent respectively in June after declines in previous months.

Spain gains

In Spain, the June surge was the a tenth consecutive month of year-on-year gains. The Spanish market is rebounding from record lows with 18-percent first-half growth. Sales are being boosted by the renewal of state-backed sales subsidies for buyers who trade in older vehicles.

Peugeot, Citroen and Opel all fared better in Spain than in France last month, with sales growth outpacing the broader market. Among major brands, Ford, Fiat, VW and Renault led the advance with gains close to 50 percent.

'Fragile' Italy

The 4 percent gain in Italian vehicle registrations was supported by double-digit growth in sales of the Dacia, Renault and Peugeot brands.

Sales of Fiat Chrysler's mass-market brand Fiat rose by 5 percent, resulting in the parent group's total share of the Italian market dipping to 27.1 percent from 27.5 percent in the same month last year.

Industry groups warned that the Italian recovery in the first six months was still fragile and mainly the result of higher demand from the rental sector, while vehicle sales to private customers dropped slightly in the January-June period.

Europe is recovering from a prolonged auto market slump that took demand to a two-decade low and led to widespread losses for vehicle makers and job cuts, as the industry struggled to cover the huge fixed costs of its manufacturing base in the region.

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