European Car Sales Are About To Hit A 19-Year Low

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Dec. 14 (Bloomberg) — European Union car sales fell to a 19-year low, with French companies PSA Peugeot Citroen and Renault SA and Italian competitor Fiat SpA posting the biggest drops, as a recession in countries using the euro hurt demand.Eleven-month registrations in the 27-nation EU fell 7.6 per cent to 11.3 million vehicles, the lowest figure for the period since 1993, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. The decline was propelled by a 10 per cent plunge in November.

The 17-country euro area went into a recession in the third quarter. The European Central Bank is predicting that all the nations will post economic growth only in 2014, the year that car-industry executives also forecast an initial recovery in Europe’s auto market. German carmakers’ regional market share in November rose at the expense of their French and Italian peers, with Bayerische Motoren Werke AG beating Fiat for the month.

“There are clearly two worlds: on one side, the German carmakers and on the other, the Latin carmakers,” Florent Couvreur, a Paris-based analyst at CM-CIC Securities, said by phone. “The Latin carmakers are historically more exposed to southern European markets, which are plunging. This may go on next year.”

Including Switzerland, Norway and Iceland, European car sales in November fell 10 per cent from a year earlier to 965,918 vehicles. Eleven-month sales declined 7.2 per cent to 11.7 million cars. That’s the lowest figure for the region since 1994, Quynh-Nhu Huynh, the ACEA’s economics and statistics director, said in an e-mail.

Contraction Predicted

The association has predicted a full-year market contraction to about 12 million cars, the fewest cars sold in Europe since 1995 and the sharpest decline since 1993.

There’s “little reason to believe that EU volumes will grow next year, which means that the spread between EU-focused and export-oriented original-equipment manufacturers will only continue to widen,” Erich Hauser, a London-based analyst at Credit Suisse, said today in an e-mail.

Fiat dropped as much as 6.4 per cent to 3.46 euros, the steepest intraday decline since Nov. 7, and was trading down 2.6 per cent at 12:09 p.m. in Milan. Renault rose 0.2 per cent to 40.29 euros in Paris, while Peugeot gained 1.5 per cent to 5.28 euros, reversing a decline today of as much as 1.7 per cent.

BMW, the world’s biggest manufacturer of luxury cars, increased European sales 0.4 per cent in November to 67,200 vehicles, the only groupwide gain among the top seven auto sellers in the region, according to the ACEA. Its market share last month rose to 7 per cent from 6.2 per cent a year earlier.

Peugeot’s Share

Peugeot’s group sales in Europe fell 16 per cent in November to 105,284 vehicles, reducing the Paris-based manufacturer’s market share to 10.9 per cent from 11.7 per cent. Renault’s European sales plunged 27 per cent to 82,885 cars, accounting for 8.6 per cent of the market versus 10.6 per cent.

Fiat’s sales in Europe fell 13 per cent last month to 59,152 cars, narrowing the Turin-based company’s market share to 6.1 per cent from 6.3 per cent.

Volkswagen AG, Europe’s biggest carmaker, posted a 2.5 per cent decline in sales in the region last month to 248,690 vehicles, as demand dropped 4.5 per cent at the namesake VW brand and 2.3 per cent at the Audi luxury marque. The Wolfsburg, Germany-based group’s regional market share expanded to 25.7 per cent from 23.7 per cent.

Mercedes Growth

Daimler AG’s companywide European market share rose to 5.7 per cent from 5.2 per cent as its Mercedes-Benz luxury brand posted a 1.5 per cent sales increase. The Stuttgart, Germany- based manufacturer’s registrations in Europe declined 0.7 per cent because of an 18 per cent plunge at the Smart two-seat car division.

“All the three German OEMs have new models in place,” such as Volkswagen’s Golf hatchback and Mercedes’s A- and B- Class compacts, said Jens Schattner, an analyst at Macquarie Group Ltd. “This helps on top of the structural market shakings that these guys face.”

Four of Europe’s five biggest automotive markets shrank last month, with deliveries in Germany falling 3.5 per cent. That countered a gain in October of 0.5 per cent in the country, which accounts for 25 per cent of the region’s auto sales.

Registrations dropped 19 per cent in France, and 20 per cent in Italy and Spain. The U.K. overtook France as the region’s second-biggest market this year with an 11 per cent gain in November.

Germany’s economy, the region’s biggest, may shrink this quarter, according to the IFO research institute, and its unemployment climbed for an eight consecutive month in November.

General Motors Co.’s group sales in Europe last month fell 13 per cent to 75,876 vehicles, led by a 20 per cent drop for the Chevrolet brand. Dearborn, Michigan-based Ford Motor Co.’s European sales fell 10 per cent to 72,585 cars.

The two U.S. carmakers are planning to shut factories in Europe by 2016 in response to the market contraction. Fiat and Peugeot each announced within the past week that they’re eliminating 1,500 jobs.

–Editors: Tom Lavell, Chris Reiter

To contact the reporter on this story: Mathieu Rosemain in Paris at [email protected]

To contact the editor responsible for this story: Chad Thomas at [email protected]