European Car Sales Rise a Ninth Month on Consumer Confidence

Jun 17, 2014 3:50 am ET

(Updates with share prices in eighth paragraph.)

June 17 (Bloomberg) -- European car sales rose 4.3 percent in May, the ninth consecutive monthly gain, as a recovery in consumer confidence encouraged purchases of new models from Renault SA and Volkswagen AG following a six-year market slump.

Registrations increased to 1.13 million vehicles from 1.09 million a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today. Five-month sales gained 6.6 percent to 5.62 million cars.

European Central Bank President Mario Draghi signaled last month that unprecedented monetary policy measures were coming in June to encourage lending in the countries sharing the euro to combat sluggish economic growth. Among the top 10 car sellers in Europe, registrations at third-ranked Renault jumped the most in May, at 18 percent, with gains of 9.5 percent at market leader Volkswagen and 4.2 percent at second-place PSA Peugeot Citroen.

“It’s a modest recovery from low levels of overall demand,” Marc-Rene Tonn, an analyst with M.M. Warburg in Hamburg, said by phone. “It’s the second-worst May since 2003.”

The ACEA compiles figures from the 28-country European Union, excluding Malta, as well as numbers from Switzerland, Norway and Iceland. The stretch of gains is the longest since a 10-month period of sales growth that ended in March 2010.

Registrations in Germany, Europe’s largest market at about one-quarter of deliveries, rose 5.2 percent in May, in part thanks to an extra selling day. Sales fell 3.8 percent in Italy, the only decline among Europe’s five biggest auto markets.

‘Pent-Up Demand’

“If you look at places like Spain, where sales gained 17 percent, it’s clear there’s a degree of pent-up demand, but how sustainable this is remains to be seen,” Tonn said.

Renault rose as much as 1.9 percent and was trading up 1.8 percent at 69.11 euros as of 9:48 a.m. in Paris. Peugeot increased 1.5 percent to 10.14 euros. Volkswagen gained 1 percent to 197 euros in Frankfurt.

European sales surged 24 percent last month at Renault’s low-cost Dacia division, which has revamped its Duster sport- utility vehicle and Sandero hatchback. The Renault namesake brand, bolstered by the Captur crossover, sold 16 percent more cars. The manufacturer, based in the Paris suburb of Boulogne- Billancourt, said three months ago that it’s expanding production of the Captur to meet demand.

Skoda’s Jump

Sales jumped 23 percent last month at Volkswagen’s Skoda marque, helped by a new version of the Octavia small car, and 22 percent at the Seat nameplate, which added a station-wagon variant to its Leon compact vehicle line at the end of 2013.

Registrations by the namesake VW brand and the Audi luxury division each rose 4.8 percent. The Wolfsburg, Germany-based parent company is considering tripling the VW marque’s SUV line in its bid to overtake Toyota Motor Corp. in global group deliveries, people familiar with the matter said this month.

Demand at Paris-based Peugeot has been propelled by the 2008 compact SUV and 308 hatchback, with the company boosting production of both models this year to match orders. The Peugeot brand’s European sales rose 4.8 percent in May, and the Citroen nameplate’s registrations increased 3.5 percent.

The Peugeot brand’s European sales have the potential to rise more than 10 percent this year, Maxime Picat, head of the division, said yesterday in an interview on France’s Radio Classique.

Opel Models

Combined European sales by General Motors Co.’s twin Opel and Vauxhall marques rose 6.2 percent last month, helped by the Mokka compact SUV and Corsa small car. Detroit-based GM’s group registrations in Europe dropped 7.1 percent as the Chevrolet nameplate is being withdrawn from the region.

Opel, based in the Frankfurt suburb of Ruesselsheim, is revamping its lineup with 27 new or updated models through 2018 in a bid to overtake Ford Motor Co. as Europe’s second-biggest automotive nameplate, after VW. Division Chief Executive Officer Karl-Thomas Neumann outlined plans early this month to reach an 8 percent market share by 2022. That compares with a 6.8 percent share for Opel and Vauxhall so far this year.

Europe’s car market is recovering from a two-decade low reached in 2013. Industry executives are predicting growth in regional auto demand of 2 percent to 3 percent this year. A recovery in the region and Chinese market expansion will help automakers meet their goals this year, analysts at Deutsche Bank AG said in a report yesterday, citing company comment during an industry conference last week.

ECB Strategy

Consumer confidence in the euro area rose in May to the highest since October 2007, according to figures released last month. The ECB cut its deposit rate below zero in early June in an effort to counter possible deflation as economic growth remains weak following a recession that ended a year ago.

Discounting in Germany’s auto market eased last month, with cuts narrowing to an average 11.3 percent off the recommended price from 11.6 percent a year earlier, according to trade publication Autohaus PulsSchlag. Audi and Volkswagen dealers were the only ones among the largest brands to lower prices more than in the 2013 period.

Bayerische Motoren Werke AG, the world’s biggest maker of luxury vehicles, posted a 2.5 percent decline in group European sales as an 18 percent plunge at the Mini small-car brand overwhelmed a 1.4 percent gain at the namesake BMW marque. The up-market 5-Series sedan and X5 SUV sustained the BMW nameplate’s deliveries last month, and the carmaker introduced the 2-Series compact coupe in March, while the Mini lineup is being updated.

Sales by Daimler AG’s Mercedes-Benz marque, which ranks third in premium-auto deliveries to BMW and Volkswagen’s Audi, rose 6.1 percent, buoyed by demand for the C-Class sedan and GLA compact SUV. Registrations at Daimler’s Smart division fell 16 percent as the unit prepares a new version of its main two-seat model and a four-seat car.

European registrations rose 10 percent in May at Nissan Motor Co. and 2.2 percent at Toyota. Sales fell 2.8 percent at Dearborn, Michigan-based Ford and 2.9 percent at Turin, Italy- based Fiat SpA.