European car sales rose 7.6 percent in February, the sixth consecutive monthly gain, as an economic revival and price cuts helped boost demand for new models from Renault SA (RNO) and Volkswagen AG. (VOW)
Registrations increased to 894,730 vehicles from 831,371 a year earlier, the European Automobile Manufacturer’s Association, or ACEA, said today. Two-month demand jumped 6.3 percent to 1.86 million cars.
Auto deliveries in the region are reviving after a six-year contraction, with Renault, PSA Peugeot Citroen (UG) and Volkswagen among carmakers offering discounts to lure buyers. The European Commission is forecasting the euro area’s economy will grow 1.2 percent in 2014, marking a revival from a recession that ended early last year. Sales rose 12 percent at Renault, 7.2 percent at Volkswagen and 3.5 percent at Peugeot, the ACEA said.
“Demand has been depressed for so long that it can only go up,” Erich Hauser, a London-based automotive analyst at International Strategy & Investment Group, said by phone. Sales will be pushed by replacements, with “loads of cars that are coming off lease, the highest-ever number of vehicles that are between three and five years old.”
Renault rose as much as 2.9 percent and was trading up 2 percent at 68.53 euros at 12:15 p.m. in Paris. Peugeot declined 0.4 percent to 12.71 euros, reversing a gain earlier today. Volkswagen fell 0.5 percent to 179.35 euros in Frankfurt after a board committee at Swedish truckmaker Scania AB recommended investors reject the Wolfsburg, Germany-based car producer’s bid for full control.
Volkswagen, Europe’s biggest auto manufacturer, posted delivery gains as buyers sought new versions of the Audi brand’s A3 compact and Q7 sport-utility vehicle and the Skoda division’s Octavia car. Growth of 12 percent at Audi, the world’s second-biggest maker of premium vehicles, outpaced a 6.8 percent jump at Bayerische Motoren Werke AG (BMW)’s namesake brand, the largest luxury-car producer worldwide, and a 5.1 percent increase at Daimler AG (DAI)’s third-ranked Mercedes-Benz.
Renault, based in the Paris suburb of Boulogne-Billancourt, benefited from a 34 percent surge at the low-cost Dacia division, which is offering a revamped Duster SUV and Logan sedan. The Captur crossover helped Renault-brand sales rise 3.8 percent.
Dealer discounts in Germany widened to an average 11.7 percent of the list price last month from 11 percent in January, according to trade publication Autohaus PulsSchlag. Brands offering the steepest price cuts included Renault, Peugeot and Citroen, followed by Fiat SpA (F), Ford Motor Co. and General Motor Co.’s Opel nameplate, the magazine’s figures show. VW and Audi placed sixth and eighth in discounting.
European sales at the Peugeot nameplate jumped 6.6 percent, more than making up for a 0.1 percent slide at the Citroen marque. Maxime Picat, head of the Peugeot brand, said earlier this month that new models, such as the 308 hatchback that won the 2014 European Car of the Year award, are helping the unit win buyers amid a shift to more upmarket cars.
GM (GM:US) sold 12 percent more autos in Europe, with Opel and sister marque Vauxhall boosting registrations 16 percent. Opel is likely to expand 2014 deliveries in the region faster than competitors, as models such as the Adam city car attract buyers new to the brand, Karl-Thomas Neumann, head of the Ruesselsheim, Germany-based division, said in early March.
Demand increased in four of Europe’s top five markets, with only second-ranked France posting a decline. Deliveries in fifth-place Spain jumped 18 percent because of a government program designed to bolster sales by encouraging trade-ins of older vehicles for cars with lower emissions. The ACEA compiles figures from the European Union, including new member Croatia as of this year, as well as Switzerland, Norway and Iceland.
Automotive executives are predicting industrywide European car sales, which reached a two-decade low in 2013, will expand by about 2 percent this year, with Ford (F:US) estimating gains of as much as 6 percent in its main markets.
“The key problem is, we don’t know how much of this growth will be driven by aggressive pricing,” Jens Schattner, a Frankfurt-based automotive analyst at Macquarie Group Ltd., said by phone. Prior to U.S. automakers seeking bankruptcy protection in 2009, “the volumes were fantastic, but the underlying profitability was a disaster. We’re exactly in the same situation, with overcapacity still there.”
Carmakers responded to the six-year Europewide decline in sales by scaling back production. Peugeot shuttered a plant in the Paris suburb of Aulnay in 2013, while Opel will close an auto factory in Germany and Ford will shut sites in Belgium and the U.K. this year. Fiat eliminated a car plant on the Italian island of Sicily at the end of 2011.
Even with the cutbacks, the regional auto industry’s average production will probably only rise to 76.3 percent of capacity this year from 74.8 percent in 2012, according to research company IHS Automotive.
Excess production lines are “a persistent issue,” Philippe Houchois, a London-based analyst at UBS AG, said by phone. “Europe will probably reduce its industrial capacity in the five years to come, but not fast enough to adapt it to demand.”
Fiat’s group sales in Europe rose 5.8 percent last month, helped by a wagon version of the main brand’s 500 subcompact and the Jeep Grand Cherokee SUV. Dearborn, Michigan-based Ford boosted deliveries in the region 11 percent as the Fiesta small car and Kuga compact SUV attracted customers. The company said in January that it’s increasing Fiesta production at its plant in Cologne, Germany.
Toyota Motor Corp. (7203), the world’s biggest carmaker, posted a 14 percent jump in demand in Europe, where it’s the largest Asian auto seller. Didier Leroy, head of the company’s European division, said in December that hybrid models will propel Toyota’s sales in the region. He forecast on March 3 that the carmaker’s European deliveries, including Russia, will rise about 2.1 percent this year.
Hyundai Motor Co. (005380) was the only automaking group among the top 10 in Europe to report a sales drop last month, with a 3 percent decline.
“The industry is still faced with record-high incentive levels and artificially inflated sales,” so “it’s too early to be celebrating a recovery in the European car market,” Allan Rushforth, head of the Seoul-based manufacturer’s operations in the region, said in an e-mail.
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