Bloomberg News

Ford Leads Drop as European Auto Sales Decline to Record

February 19, 2013

Ford Paces Decline as Europe Car Market Reaches January Low

Registrations dropped 8.7 percent to 885,159 vehicles last month from 969,219 cars a year earlier. Source: Ford Motor Co.

European Union car sales fell to the lowest level for a January, with Ford Motor Co. (F:US) and PSA Peugeot Citroen (UG) posting the biggest drops, as economic contractions in the southern part of the region widened to Germany and France.

Registrations dropped 8.7 percent to 885,159 vehicles last month from 969,219 cars a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. The figure was the lowest start to the year since the group began tracking sales in 1990, it said.

Carmakers are struggling to end losses in Europe that Fiat SpA (F) Chief Executive Officer Sergio Marchionne has estimated at an industrywide 5 billion euros ($6.68 billion) in 2012. Ford, whose Europewide sales fell 26 percent in January, and Peugeot are among manufacturers in the region planning a combined 30,000 job cuts and five plant shutdowns. Sales fell 8.6 percent in Germany, Europe’s biggest economy, and 15 percent in France, the second-biggest among the 17 nations using the euro.

“The uncertainty in Europe is hurting consumers also in Germany,” said Peter Fuss, a partner at Ernst & Young consulting company’s Global Automotive Center in Frankfurt. With unemployment among young people as high as 50 percent in some European countries, “who will buy a car in those conditions? The change in the market is structural.”

Volkswagen Shares

Volkswagen AG (VOW), Europe’s largest carmaker, was unchanged at 176.70 euros at 9:42 a.m. in Frankfurt after falling as much as 0.7 percent. Peugeot, the region’s second-biggest auto manufacturer, rose 0.3 percent to 6.37 euros, and French competitor Renault SA increased 1.2 percent to 49.19 euros in Paris. Fiat SpA fell 1.2 percent to 4.32 euros in Milan.

Industrywide auto sales in the 27-nation EU fell to a 17-year low in 2012. Deliveries are likely to drop for a sixth consecutive year in 2013, according to IHS Automotive research company. The euro zone entered a recession in the third quarter. Europewide sales, which also include Switzerland, Iceland and Norway, fell 8.5 percent in January from a year earlier to 918,280 cars, the ACEA said.

Registrations dropped 18 percent in Italy and 9.6 percent in Spain, which rank fourth and fifth respectively in European car sales. In the U.K., which overtook France last year to become the region’s second-largest auto market, registrations rose 11 percent.

Top Discounters

Peugeot, Renault (RNO), Ford and Fiat were the top four discounters of vehicles in Germany in January, according to Autohaus PulsSchlag industry magazine.

Ford estimates that its loss in Europe will widen to $2 billion this year from $1.5 billion in 2012. The Dearborn, Michigan-based manufacturer is shutting vehicle and component plants in the U.K. and Belgium by the end of 2014 and eliminating 6,200 jobs, or 13 percent of its workforce, in Europe in response to the auto-market decline. Ford’s Europewide sales fell to 61,544 vehicles last month.

Peugeot’s European registrations dropped 16 percent to 104,291 cars. The Paris-based carmaker said on Feb. 13 that it’s planning an upmarket shift of its main brand, and pledged to cut its cash-consumption rate 50 percent this year after burning through 3 billion euros in 2012.

Volkswagen posted a 5.5 percent drop in sales in the region last month, the ACEA said. Renault, based in the Paris suburb of Boulogne-Billancourt, reported a 6.1 percent decline. Renault will eliminate 7,500 jobs in France through 2016, including 5,700 posts that will disappear when people retire or quit and aren’t replaced.

Fiat’s Jobs

Fiat sold 12 percent fewer vehicles in Europe last month. The Turin, Italy-based carmaker is “working at the speed of light” to meet a target of breaking even in the region by 2016 at the latest, Marchionne said on Jan. 30. Fiat, which shuttered a plant on the Italian island of Sicily at the end of 2011, is cutting 1,500 jobs in Poland.

General Motors Co. (GM:US), whose pretax losses in Europe more than doubled last year to $1.8 billion, posted a 5.2 percent decline in European registrations. The Detroit-based manufacturer’s Opel and Vauxhall brands in Europe rolled out the Mokka compact sport-utility vehicle in October and the Adam small car last month. Opel may stop making cars as soon as the end of 2014 at its factory in Bochum, Germany, where the assembly line employs about 3,100 workers. The shutdown would be the first of a German auto plant since World War II.

BMW Growth

German luxury-vehicle manufacturers Bayerische Motoren Werke AG (BMW) and Daimler AG (DAI) partly offset the market decline with new models that bolstered their sales.

BMW’s European group sales gained 6.4 percent last month. Models bolstering demand at the Munich-based carmaker include new versions of the 3-Series sedan and X1 compact sport-utility vehicles, BMW said in its global sales report two weeks ago. The Mercedes-Benz brand of Stuttgart, Germany-based Daimler increased European registrations 4.7 percent in January, helped by the A- and B-Class compacts and G-Class SUVs.

Toyota Motor Corp. (7203)’s Europewide sales fell 16 percent, led by a 47 percent drop for the Japanese carmaker’s Lexus brand. Nissan Motor Co., Renault’s Japanese alliance partner, posted a 6.4 percent European sales decline.

To contact the reporter on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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