April 16, 2010. Copyright 2010, Graphic News. All rights reserved

Europe’s car sales expected to dive after strong first quarter
By Neil Winton

LONDON, April 16, Graphic News:  On the surface, West European car sales looked healthy in the first quarter, but in fact the market is about to go into reverse as the impact of government cash-for-clunkers subsidies runs out.

Western Europe car sales rose almost 12 percent in March to 1.6 million, bringing the improvement for the first quarter to 11 percent or 3.5 million, according to the European Car Manufacturers Association. But this is likely to be the last good news for some time.

Making hay while the sun shone, Renault of France performed spectacularly well, followed by compatriot Peugeot-Citroen. Toyota of Japan, rattled by the unintended acceleration scandal, saw its market share dive.

Last year, as the worst recession in 60 years knocked the bottom out of economies, governments, led by Germany, stepped into the breach to help car manufacturers. The German government offered a scrapping fund worth five billion euros if buyers handed over their 9-years or older cars for scrap and bought a new car. The scheme, which offered 2,500 euros for each scrapped car, ran out of funds last September, but factories were kept busy stamping out orders for months. Most other European countries also introduced scrapping incentives, but not as generous as the German one.

Experts say that with the ending of scrapping subsidies, sales in Germany -- Europe’s biggest market, accounting for about 25 percent of sales -- are likely to drop by about one million in 2010 to 2.8 million. For Western Europe as a whole, automotive consultancy J.D. Power expects sales to fall eight percent in 2010 to 13.7 million.

According to Peter Schmidt, editor of European newsletter Automotive Industry Data, Renault and its Romanian subsidiary Dacia raced to number three in Europe, overtaking Ford, GM Europe’s Opel, Vauxhall and Chevrolet, and Fiat of Italy.

“My provisional numbers show Renault increased sales 44 percent -- four times faster than the market average in the first quarter. This is Renault’s spring offensive, and it’s surprising because the company doesn’t have one notable, brand new car selling like hotcakes,” Schmidt said.

Germany’s VW was still number one with a market share of about 19.9 percent, compared with 20.6 in the same period last year. VW sales include mass-market subsidiaries Skoda and SEAT, as well as its upmarket Audi, Bentley, Lamborghini and Bugatti brands. Number two was Peugeot-Citroen, with sales up an impressive 21 percent, twice the market average rate of increase, said Schmidt.

Toyota was a big loser, despite pushing hard for sales after its public relations disaster. Toyota and its Lexus premium subsidiary’s first quarter sales fell a provisional eight percent, and its market share dropped from 5.8 percent to 4.8 percent, according to Schmidt.
/ENDS