European car sales fall to 20-year low

Co.

Registrations dropped 5,9 percent to 1,08 million vehicles from 1,15 million a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said yesterday in a statement. The figure was the lowest for any May since 1993, said Quynh-Nhu Huynh, the group’s economics director.

Peugeot, Renault, Fiat and GM’s deliveries fell at least 10 percent in the region last month as price cuts failed to attract buyers.

European political leaders are seeking ways to revive a shrinking economy weighed down by sovereign-debt crises, with unemployment in the 17 countries using the euro reaching a record 12,2 percent in April.

“We have to wait at least five years until the car market will basically recover,” Ferdinand Dudenhoeffer, director of the Centre for Automotive Research at University of Duisburg-Essen in Germany, said.

“That means that the debt crisis in southern Europe will deepen and last” for awhile.
Car industry executives are forecasting that the European car market will shrink a sixth consecutive year in 2013, with a possible recovery starting by the final quarter. Maxime Picat, head of the Peugeot brand, reiterated a prediction on May 22 that industry sales in Europe will fall 5 percent this year.

Group European registrations at Paris-based Peugeot, the region’s second-biggest carmaker, dropped 13 percent in May. Renault, based in the Paris suburb of Boulogne-Billancourt, reported a 10 percent drop. European sales fell 11 percent at both GM and Turin, Italy-based Fiat.

Peugeot fell as much as 1,1 percent to 6,57 euros and was trading at 6,64 euros as of 11:32am in Paris. Renault rose 0,2 percent to 57,42 euros. Fiat fell 1,1 percent to 5,59 euros in Milan.

The Renault financial division’s 2,875 percent euro-denominated bonds maturing in January 2018 fell 0,2 cents to 101,3 cents.

The euro region’s recession, the longest since the common currency was introduced in 1999, deepened in the first three months of the year as investment and exports plunged.

The European Central Bank widened its forecast of a full-year drop in the area’s gross domestic product on June 6. The economies of Portugal, Italy, Greece, and Spain will contract at least 1,5 percent, economists surveyed by Bloomberg predict.

The ACEA compiles figures for the 27-member EU plus Switzerland, Norway and Iceland. The car-sales drop in May contrasts with growth in April that was the first gain in 19 months. Five-month Europewide registrations fell 6,8 percent to 5,26 million units, with demand in the EU declining at the same rate to 5,07 million vehicles.

Four of Europe’s five biggest automotive markets shrank in May. Deliveries in Germany, the region’s largest economy, dropped 9,9 percent, compared with an 3,8 percent increase in April.

Sales declined 10 percent in France, 8 percent in Italy and 2,6 percent in Spain. Demand in the UK rose 11 percent.

“The main difficulty is that the UK market is the only one that supports European demand because the German one is worse than expected,” Thomas Besson, a Paris-based analyst at Kepler Capital Markets, said today by phone.

“That being said, consumer confidence is improving everywhere in Europe except in France and Italy, and this is very encouraging.”

Western Europe’s market will probably shrink to about 12 million vehicles in 2014, a 29 percent decline from the pre-crisis peak of 16,8 million units, and may stagnate at that level for the foreseeable future, consulting company AlixPartners said yesterday in a statement.

High youth unemployment, an ageing population and the declining value of the car as a status symbol indicate that the drop in demand is structural, Managing Director Elmar Kades said.

Dealers in Germany cut car prices by an average 11,9 percent last month, versus 11,6 percent a year earlier, according to Autohaus PulsSchlag trade magazine. – Bloomberg.