Europe new-car sales rise 1% in first gain of 2020

Automakers eked out a surprise sales increase last month in Europe, the first advance this year for a region still struggling with a patchy recovery reliant on government subsidies.

New-car registrations rose 1.1 percent to 1.3 million vehicles in the European Union, Britain and the European Free Trade Association (EFTA) countries in September, industry association ACEA said Friday.

Sales increases in Italy and Germany -- two of the major countries offering incentives to support electric vehicle purchases -- offset still-slumping demand in Spain and France.

Keeping the momentum going in the last few months of the year will be a challenge.

Leaders in the UK, Germany, Italy and France are struggling to cope with record new COVID-19 cases.

Targeted strategies to slow the spread of the disease are being used for now before resorting to the kind of broad national lockdowns that decimated car sales earlier this year.

"We would argue consumers don't share automakers' revival hopes," Michael Dean, a Bloomberg Intelligence analyst, said in a note ahead of the industry's sales report. He expects annual deliveries to decline at least 20 percent and sees risk that the drop will be worse because of coronavirus-related restriction measures.

Europe's car sales are still down 29 percent for the year through September. After deliveries cratered in March and April, automakers pared declines the following three months, then suffered a setback in August.

Germany's car market expanded last month for the first time this year, as subsidies for battery-powered vehicles more than quadrupled sales of plug-in hybrid and battery-electric models.

But while total registrations rose 8.4 percent there, Spain saw a 13 percent drop despite also offering incentives toward EVs.

Western Europe was the worst-performing region this year through August for Volkswagen Group, the top-selling automaker both in the region and globally. Still, with a recovery on solid footing in China, CEO Herbert Diess said VW's monthly orders and deliveries were up as September came to a close. He sees the positive trend continuing into the fourth quarter.

"It needs to be seen how much of the currently strong sales momentum is pent-up demand, how much is cyclical and what is related to 'the reincarnation of the car,' " Arndt Ellinghorst, Sanford C. Bernstein's European auto analyst, wrote in an Oct. 1 report.

He predicted recovering deliveries, low inventories and strong pricing will drive "remarkable near-term earnings momentum" for BMW Group and Daimler, with VW Group also benefiting.

Europe's biggest automaker, Volkswagen Group, saw sales rise 14 percent, with demand for Audi leaping 42 percent, Skoda up 17 percent, Seat up 7.7 percent and VW brand rising 6.5 percent. Demand for Porsche fell 19 percent.

Sales at No. 2, PSA Group declined by 14 percent. Among PSA brands Opel had the worst result with registrations plunging 33 percent. DS sales were down 14 percent, Citroen fell 9.6 percent, while Peugeot rose 3.4 percent.

Renault Group reported a rise of 8.1 percent, with Dacia up 33 percent, offsetting a1.3 percent drop at the core Renault brand.

Fiat Chrysler Automobiles posted a 12 percent rise, with Fiat up 10 percent, Jeep up 25 percent and Alfa Romeo slipping 1.3 percent.

Ford's registrations were down 4.5 percent.

Mercedes-Benz sales fell 5.2 percent, while Smart plunged 48 percent.

Sales of rival premium brand BMW dropped 9.2 percent, while demand for Mini vehicles declined 20 percent.

Among Asian brands, Hyundai sales fell 4.6 percent, while Kia's volume was down 8 percent. Toyota brand sales rose 11 percent, while Nissan too outpaced market growth, rising 6.6 percent.

In the first nine months of the year, sales dropped by 29 percent as the coronavirus lockdown forced automakers to close showrooms across Europe.