New car sales fall to 17-year low in EU

Christiaan Hetzner and Helen Massy-Beresford Frankfurt and London

Demand for new cars in recession-bound Europe fell to a 17-year low in 2012, leaving mass market manufacturers little hope for this year as they try to cut costly excess factory capacity and aggressive discounting dents their margins.

Registrations data released yesterday also showed the biggest annual drop since a 16.9 percent downturn in 1993, highlighting the crisis for car manufacturers in Europe. Consumers are fretting over austerity measures, job security and rising living costs, and those who want to buy new cars are struggling to secure credit.

Even Germany’s mighty Volkswagen suffered a drop in sales, according to the figures from the European automotive industry association ACEA.

However, South Korean brands Hyundai and Kia, which are making an aggressive push in Europe, proved it is possible to expand sales even during a grim downturn.

Peter Fuss, a senior advisory partner at Ernst & Young’s Global Automotive Centre, said an industry practice of registering new cars before offering them as used vehicles at a discount was flattering even the dire new sales figures.

He said: “The actual decline is much worse than the statistics would have us believe as sales figures for the year were artificially inflated as a result of self-registrations by dealers and car makers, especially in the region’s biggest market, Germany.”

Mass market car makers are cutting jobs in under-used plants across Europe, with Renault the latest to announce job losses, following Honda, Ford, PSA Peugeot Citroën and Opel.

New car registrations fell 8.2 percent to 12.05 million vehicles in 2012, the lowest level since 1995, ACEA said.

Losses in all major euro zone economies, combined with two fewer working days on average, sent EU registrations tumbling 16.3 percent last month to 799 407 vehicles, it added. This marked the worst plunge in 26 months.

The industry tried to satisfy more robust demand for second-hand cars through the self-registrations.

Nearly 904 500 vehicles were registered last year either to car manufacturers themselves or their dealers in Germany, figures from Dataforce and the German Federation for Motor Trades and Repairs showed.

“Further, to prevent a freefall in sales, automakers and dealers offered record discounts, which are likely to put a lot of pressure on their margins,” Fuss added.

Among the worst hit last month were mass-market stalwarts including US car makers Ford and General Motors, where group sales each fell roughly 27 percent. – Reuters