By BLOOMBERG
European Union car sales in May fell to a 20-year low as rising joblessness caused by a recession in the euro region contributed to falling demand at PSA Peugeot Citroen, Renault SA and General Motors Co.
Registrations in the 27-member EU dropped 5.9% to 1.04 million vehicles from 1.11 million cars a year earlier, reaching the lowest level for the month since 1993, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. The drop contrasts with 1.7% growth in April that was the first gain in the market in 19 months. Including figures from Switzerland, Norway and Iceland, sales in May fell 5.9% to 1.08 million cars.
The unemployment rate reached a record 12.2% in April in the 17 countries using the euro, and manufacturing output in the area contracted in May, extending a decline to almost two years. Auto-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.
“Nobody’s buying cars,” and there’s “no reason to be optimistic,” as the sales increase the previous month was because of a calendar effect, Jens Schattner, a Frankfurt-based analyst at Macquarie Group Ltd., said before the ACEA released figures. Any revival in deliveries won’t start until the end of the third quarter at the earliest, he said.
European sales by Paris-based Peugeot, the region’s second- biggest carmaker, fell 13% in May. Registrations in the region dropped 10% at Renault, based in the Paris suburb of Boulogne-Billancourt, and 11% at GM as well as at Turin, Italy-based Fiat SpA.
Recession forecast
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%, economists surveyed by Bloomberg predict.
Deliveries in western Europe, which excludes countries that have joined the EU since mid-2004, fell 5.7% to 1.02 million vehicles in May. Five-month Europewide sales dropped 6.8% to 5.26 million units, with demand in the EU declining at the same rate to 5.07 million cars.
Four of Europe’s five biggest automotive markets shrank last month. Deliveries in Germany dropped 9.9%, compared with an 3.8% increase in April. The U.K. market increased 11% to 180,111 cars in May.
Vehicle discounts
Dealers in Germany cut car prices by an average 11.9% last month, versus 11.6% a year earlier, according to Autohaus PulsSchlag trade magazine. GM’s Opel brand deepened its average discounting to 15.2% of the list price from 12% a year earlier and Fiat offered price cuts of 13.5% versus 12% in the 2012 period. Peugeot, Citroen and Renault’s combined average price cut in Germany was 13.3% in May, the magazine said.
Daimler AG Chief Executive Officer Dieter Zetsche said on June 12 that the European car market is “bottoming out” and a “slight recovery” is possible in the region in the second half of the year.
The Peugeot brand’s Europewide sales fell 12% in May, while the Citroen division’s dropped 15%. Peugeot said on May 22 that demand for new vehicles in the region has started to stabilize at a “very low level.” Maxime Picat, head of the Peugeot brand, reiterated a forecast that industry sales in Europe will fall 5% 2013. The company plans to shut a car factory near Paris and is in talks with unions on improving work efficiency.
GM’s strategy
GM’s European sales drop last month was propelled by a 23% plunge at the Chevrolet brand, while Opel and its U.K. sister division Vauxhall posted an 8.4% decline. Detroit- based GM, seeking to restore profit in Europe after accumulating US$18 billion (RM56.7 billion) in losses in the region since 1999, is reorganizing in response to the car-market drop with plans to shutter a plant in Germany and freeze pay for remaining workers through 2015.
Europewide sales by Dearborn, Michigan-based Ford Motor Co. fell 0.5% in May. The manufacturer, which is forecasting a combined loss of US$3 billion in Europe for last year and 2013, said this week that it’s counting on new models such as the EcoSport compact sport-utility vehicle to help reduce reliance on low-margin sales to rental-car companies in the region.
Volkswagen AG, Europe’s biggest carmaker, posted a 2.8% decline in sales in the region last month, led by a 7% drop at its namesake brand. The Audi division, the world’s second-largest maker of luxury vehicles, sold 3.9% fewer cars.
VW’s bonds
The manufacturer completed the sale of €1.2 billion (US$1.6 billion) in convertible bonds yesterday to finance an expansion that includes new plants and taking full control of truck unit MAN SE. Wolfsburg, Germany-based VW is setting up new production sites and adding models to overtake GM and Toyota Motor Corp. as the world’s biggest automaker by 2018.
European group sales at Stuttgart, Germany-based Daimler rose 0.5% as the Mercedes-Benz division, the world’s third-biggest luxury-car manufacturer, posted a 2.6% increase. Registrations at the Smart two-seat car brand dropped 15%.
Bayerische Motoren Werke AG, the global leader in luxury-vehicle sales, sold 6.6% fewer cars in Europe in May. Demand dropped 7.3% at the BMW brand and 3.4% at the Mini small-car unit.
– Mathieu Rosemain
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