Budget brands becoming big in Europe

Budget brand vehicles like the Dacia Duster (sold as a Renault in SA) are rocking the sales charts in Europe.

Budget brand vehicles like the Dacia Duster (sold as a Renault in SA) are rocking the sales charts in Europe.

Published Dec 17, 2014

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Paris/Milan - European car sales increased by just 1.2 percent last month, with budget brands led by Renault's Dacia faring better as nervous consumers shunned mid-range models in what remains a fragile recovery.

Sales advanced to 989 457 cars in November, a slowdown from the previous month's 6.2 percent year-on-year gain, the Association of European Carmakers said on Tuesday. Registrations for the year so far were up 5.5 percent.

Low-cost Dacia posted an 11 percent increase thanks to models such as the Duster SUV, helping Renault's group deliveries to rise 3.9 percent to almost 94 000 cars.

European leader Volkswagen's sales rose 2.5 percent after a similar 10 percent boost from Seat, its no-frills Spanish marque, edging the group's market share up to 26.7 percent.

A Spanish market rebound and strong UK car sales are helping to offset faltering demand in Germany and a renewed downturn in France, where high unemployment and weak consumer confidence are keeping customers out of dealerships.

“For as long as unemployment rates in Europe remain high and consumer confidence muted, we are not expecting growth in the European market to accelerate,” analysts at Evercore ISI said in a note.

Next year will at best see a slight improvement in European demand, the brokerage predicted.

RESILIENT PREMIUMS

European sales of competitively priced Hyundais rose 5.7 percent, while mid-market rivals struggled. Ford sales sagged 5.5 percent, Opel was down 12 percent and PSA Peugeot Citroen 2.9 percent lower.

Romano Valente, head of Italy's foreign carmakers' association UNRAE, said weakening French and German conditions suggested that regional demand had yet to stabilise.

But there were some bright spots. Fiat Chrysler benefited from buoyant sales of Jeep's Cherokee, Grand Cherokee and new Renegade models as the brand expands in Europe. Jeep deliveries are up a healthy 57 percent to almost 35 000 vehicles so far this year.

Premium brands continued to resist the economic gloom.

BMW sales rose 9.4 percent and Daimler advanced 4.8 percent, with Mercedes deliveries surging almost twice as much. Audi rose 3.7 percent, while Geely-owned Volvo Car posted an 8.7 percent gain.

But the market remains vulnerable, according to IHS Automotive, which expects European car sales this decade to remain 1 million vehicles short of their pre-crisis peak.

“The recovery is still skating on thin ice,” the leading industry forecaster said on Tuesday. “It would take little in the way of negative macro data to bring the current growth period to an end.”

Reuters

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