Europe Car Sales Set Growth-Streak Record on Price Cuts

By Mathieu Rosemain  

Photographer: Krisztian Bocsi/Bloomberg

Ford Fiesta automobiles, manufactured by the Ford Motor Co., sit on a barge before... Read More

European car sales rose a 12th consecutive month as price cuts by automakers and demand for compact models from Ford Motor Co. (F) and Volkswagen AG (VOW) led to the longest stretch of growth on record.
Registrations increased 1.8 percent in August to 701,118 vehicles from 688,464 a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. The growth, the slowest this year, pared sales gains in the eight months through August to 5.8 percent.
Demand for cars in Europe is reviving from a two-decade low last year that stemmed from a sovereign-debt crisis and recession in the
countries sharing the euro. The VW Polo and Ford’s competing Fiesta helped propel sales jumps last month exceeding 14 percent for those brands. Mass-market producers tried to win buyers with discounts that Barclays Plc estimated averaged 20 percent in Germany and 18 percent in France.
“A slowdown in year-on-year industry growth during the third quarter is a consequence of a slight market recovery in the second half of 2013,” Allan Rushforth, head of European operations for Seoul-based Hyundai Motor Co., said in an e-mail. “Where there is still growth for the industry, it is driven by heavy incentive spending.”

Previous Stretch

The ACEA compiles figures from the 28 European Union countries, excluding Malta, as well as from Switzerland, Norway and Iceland. The string of gains was the longest since the ACEA began compiling sales figures in 1990, Economics and Statistics Director Quynh-Nhu Huynh said in an e-mail. Until now, the most extended period of growth was the 10 months from June 2009 through March 2010.
Among the five largest European car markets, August registrations rose 9.4 percent in the U.K. and 14 percent in Spain. Sales declined in Germany, Europe’s biggest economy, as well as in France and Italy. Regionwide eight-month sales amounted to 8.64 million vehicles.
“The car-market recovery is losing its momentum month after month,” Thomas Besson, a Paris-based automotive analyst at Kepler Cheuvreux, said by phone. “This is not a very vigorous revival.”
Auto-market growth was held back by a sputtering euro-area economy that prompted the European Central Bank to cut interest rates and announce other monetary stimulus measures in early September. Car sales in July jumped 5.6 percent to 1.08 million vehicles, the ACEA also said today. Industry executives have been predicting full-year delivery gains of about 3 percent.

Italian Recession

With Italy in a recession and gross domestic product growth “stagnant” in France, “it would be naive to hope for a real recovery” in car markets, Peter Fuss, a partner consulting company Ernst & Young’s German unit, said in a report to clients. “There’s a particular risk that automakers will respond by accelerating their price rebating.”
European demand at Dearborn, Michigan-based Ford, the fourth-biggest car seller in the region, jumped 15 percent. The company raised production of the Fiesta compact in January to match sales growth, and it pledged in June to build the model’s next version at the current plant in Cologne, Germany, after reaching a cost-saving agreement with unions.
Volkswagen, Europe’s biggest carmaker, sold 9.3 percent more autos in the region, with the namesake VW brand boosting deliveries 14 percent, the Czech division Skoda posting a 21 percent increase and the Spanish marque Seat reporting a 5 percent gain.

Widening Discounts

Ford and VW were among carmakers widening discounts in August from July in markets such as Germany, the U.K. and France, according to figures compiled by Kristina Church and Michael Tyndall, analysts at Barclays.
“The recovery has basically been in terms of the volume coming back, but the price level has not come back yet,” Roelant de Waard, head of sales and marketing at Ford’s European division, said in an interview on Sept. 15. “So it’s effectively as competitive as it was.”
PSA Peugeot Citroen (UG), the Paris-based company that’s the second-biggest carmaker in the region, sold 1.6 percent more autos in Europe last month, boosted by the 308 hatchback that won the Car of the Year title at the 2014 Geneva motor show. The Opel and Vauxhall sister brands of Detroit-based General Motors Co. (GM) posted a 7.5 percent gain as demand increased for the Mokka compact sport-utility vehicle and Corsa small car.
Among Japanese and South Korean carmakers reporting European sales growth, demand at Mitsubishi Motors Corp. rose the most in August, with a 49 percent surge. Hyundai’s sales increased 1.2 percent. European registrations at Toyota Motor Corp. (7203) fell 8.4 percent.
Jaguar Land Rover, the U.K. premium division of Indian carmaker Tata Motors Ltd. (TTMT), sold 19 percent more vehicles in Europe. Regional demand at Volvo Car Group, the Swedish auto producer owned by Chinese manufacturer Zhejiang Geely Holding Group Co., increased 15 percent. Sales fell 2 percent at Bayerische Motoren Werke AG’s main brand, 3.9 percent at Daimler AG’s Mercedes-Benz and 7.6 percent at Volkswagen’s Audi.