EU car market slumps to 17-year low

A New Beetle Cabrio, left, and a Golf VII photographed in the elevators of the storage of German Volkswagen car producer in Wolfsburg, northern Germany, Thursday Match 14, 2013. (AP Photo/dpa, Sebastian Kahnert)

(PARIS-AFP) -- The EU car market slumped to a 17-year low point after shrinking for 18 months under the pressures of economic reforms on business and household budgets, trade data showed on Tuesday.

Sales fell by 5.6 per cent in June and by 6.6 per cent in the first half of the year.

But French group Renault held up in June with its low-cost Dacia brand, riding far higher than its struggling rival Peugeot Citroen.

Only in Britain are sales recovering, gaining ground strongly for several months. Manufacturers in Britain are hoping that sales this year will exceed the figure of 2.04 million in 2012.

Meanwhile the giant German group Volkswagen limited the damage to its sales.

The German auto industry has shown resilience to the depressed trading conditions in Europe, notably with a strong exports performance to emerging markets.

But German auto firms are also finding market conditions make hard going. They expect domestic sales, the biggest European market, to fall to 2.9-3.0 million from 3.083 million last year.

The head of German top-of-the-range car maker BMW, Norbert Reithofer, told the financial daily Boersen-Zeitung on Tuesday: "Overall, the market in western Europe will contract by around 5.0 per cent this year and remains a huge challenge for carmakers."

Furthermore, the situation could last until the middle of next year, he warned. "Maybe we'll see a slight pick-up in the market during the second half of 2014," said Reithofer.

The latest data, from the European Automobile Manufacturers' Association, casts a shadow over some signals that the EU economy may be recovering slowly, since in several EU countries the manufacture of cars is an important indicator of production, exports and consumer confidence.

French manufacturers see their national market contracting this year by 8.0 per cent to the lowest level since 1997.

The depressed figures reflect the impact of low growth and budget reforms on business and household spending in the European Union where several countries are in recession or bumping along with low growth.

Peugeot Citroen hardest hit

The car market in the European Union shrank further in June to the lowest level for 17 years.

In the first six months of the year, sales fell by 6.6 per cent to a total of 6.205 million, although the British market, the only one to expand, grew by 10.0 per cent.

The EU car market has been shrinking for 18 months, with one small upward blip in April when there were two more working days than in the same month last year.

In June, sales fell by 5.6 per cent on a 12-month comparison across the European Union to a total of 11.3 million, the lowest volume since 1996.

Sales in France fell by 8.4 per cent, in Italy by 5.5 per cent and in Germany by 4.7 per cent.

In Spain the fall was contained to 0.7 per cent by government help for the purchase of new cars, but the overall Spanish new car market is at its lowest level for 20 years.

The exception again was Britain where sales have risen in recent months and grew again by 13.4 per cent in June.

The performance by brand varied, with the bleakest for PSA Peugeot Citroen which suffered a 10.8-per cent fall in June. In the first half sales plunged by 13.3 per cent.

Renault, by contrast, raised sales by 1.3 per cent in June largely because of a strong performance by its Romanian Dacia range and the Duster four-wheel-drive vehicle.

In the first half, sales by General Motors fell by 11.0 per cent, by Ford by 9.6 per cent, by Fiat 10.0 per cent, Toyota 8.1 per cent and Renault 4.5 per cent.

The data covered 26 of the 27 countries comprising the European Union in June, with the exception of Malta for which data was not available.