Europe Car Sales Rise First Time Since 2007 on Renault

By Elisabeth Behrman

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• Europe Car Sales Increase for First Time Since 2007

European car sales in 2014 rose for the first time in seven years as buyers replaced aging vehicles with low-cost models from Renault SA (RNO) and Volkswagen AG (VOW), with the market’s revival from a two-decade low set to continue in 2015.
Registrations rose 5.4 percent to 13 million cars, the European Automobile Manufacturers’ Association, or ACEA, said today. That was at the upper end of industry estimates that ranged from PSA Peugeot Citroen (UG) Chief Executive Officer Carlos Tavares’s prediction of a 2 percent increase to Renault CEO Carlos Ghosn’s 6 percent forecast.
Gains were pushed by Renault’s discount Dacia brand and VW’s value-oriented Seat and Skoda marques. Amid signs that economic expansion in euro countries was stalling, automakers widened price cuts in late 2014 to stimulate demand.
“The European car market has lifted from the lows but it’s only
slowly recovering from crisis levels,” Peter Fuss, a partner at consulting company Ernst & Young’s German unit, said in an e-mailed report. The main drivers for last year’s gains were “high discounts, cheap financing, government-subsidized schemes for buying new cars and a number of new models.”
December sales rose 4.9 percent from a year earlier to 997,238 vehicles. Among the top 10 carmakers selling vehicles in Europe, BMW AG, Fiat Chrysler Automobiles NV (FCAU), Daimler AG and Nissan Motor Co. (7201) exceeded that growth rate.

Photographer: Angel Navarrete/Bloomberg

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Top Markets

All five of Europe’s largest auto markets expanded last year, with increases of 18 percent in Spain, 9.3 percent in the U.K., 4.2 percent in Italy, 2.9 percent in Germany and 0.3 percent in France.
The ACEA’s figures comprise statistics from the 28 European Union countries, excluding Malta, as well as Switzerland, Norway and Iceland. December was the 16th consecutive month of growth, the longest stretch of gains since the association began compiling registration figures in 1990.
Growth estimates for 2015 are mixed. The German carmaker association VDA predicted in December that western European sales gains will slow by half to 2 percent as dealers in Germany, France and Italy post only modest increases while U.K. volume returns to levels from before the start of the global recession in 2008.

Potential ‘Upside’

Renault’s Ghosn said last month that Europe’s car market this year may be “volatile,” with growth rates hinging on economic and monetary policies. In contrast, Arndt Ellinghorst, an analyst at Evercore ISI in London, said today by phone that sales increases may “surprise on the upside” at as much as 5 percent as declining oil prices and a drop in the euro that helps exports provide a “massive boost” to Europe’s economy.
Renault, based in the Paris suburb of Boulogne-Billancourt, sold 13 percent more cars in Europe in 2014 as the Duster sport-utility vehicle and Sandero hatchback helped Dacia boost registrations 23 percent and a new version of the Captur urban crossover led to 9.1 percent growth at the namesake brand.
European sales at Wolfsburg, Germany-based Volkswagen, the region’s biggest carmaker, gained 7 percent last year, with Skoda’s Rapid sedan and wagon and Yeti sport-utility vehicle and a revamped Leon vehicle line at Seat boosting demand at both nameplates by 14 percent. The main VW brand sold 4.3 percent more cars, while Audi (NSU), the world’s second-biggest maker of luxury cars, reported a 4.5 percent increase.

Production Boost

Ford Motor Co. (F)’s European sales jumped 5.2 percent last year. The Dearborn, Michigan-based manufacturer said today that it’s increasing production at its two German plants by as much as 19 percent as demand in the region increases for the Fiesta subcompact, Focus hatchback and C-Max and Grand C-Max vans.
Peugeot, Europe’s second-biggest carmaker, posted a 3.7 percent sales increase in the region. Growth was bolstered by the Peugeot nameplate’s 308 hatchback and 2008 and 3008 crossovers and the Citroen marque’s C4 Cactus SUV.
General Motors Co. (GM)’s European brands Opel and Vauxhall sold 7.3 percent more cars in the region, helped by the Adam city car and Mokka compact SUV. Group registrations fell 4.6 percent as Detroit-based GM withdrew the Chevrolet nameplate from the market.
European group sales at Munich-based BMW increased 4.9 percent. The namesake brand, the world’s largest luxury-car manufacturer, won 5.5 percent more buyers as it added the 4-Series coupe, i8 plug-in hybrid sports car and van-like 2-Series Active Tourer to its line-up. The Mini division, which offered an updated hatchback toward the end of the year, posted a 2.2 percent increase.
BMW ranked sixth in industrywide deliveries last year in Europe to remain ahead of Fiat Chrysler (FCA), the company created from the merger of Italian manufacturer Fiat and U.S. auto producer Chrysler. The London-based carmaker boosted sales in the region 3.5 percent as the Renegade compact SUV propelled a 70 percent surge at the Jeep brand.
In addition to Renault, carmakers posting European sales gains exceeding 10 percent last year included Japanese manufacturers Nissan, Mazda Motor Corp. (7261) and Mitsubishi Motor Corp. (7211) as well as Swedish producer Volvo Car Group.