European car sales fall to 17-year low as markets contract

European car sales fell to a 17-year low in June as record unemployment in the countries using the euro hurt demand at Fiat and Peugeot Citroen.

Registrations decreased 6.3 per cent to 1.18 million vehicles from 1.25 million cars a year earlier, the Brussels- based European Automobile Manufacturers’ Association, or ACEA, said today.

The figure was the lowest for the month since 1996, said Quynh-Nhu Huynh, the group’s economics director.

First-half sales declined 6.7 per cent to 6.44 million vehicles. The unemployment rate reached 12.2 per cent in the euro area in May, and was probably at that level for the entire second quarter, according to the median forecast of analysts.

Executives at both Peugeot and French competitor Renault reiterated predictions this month that the region's car market will contract 5 per cent this year in the sixth full- year drop.

The ACEA figures come from the 27 nations that were EU members prior to Croatia joining this month, plus Switzerland, Norway and Iceland.

Deliveries in western Europe, which excludes countries that have joined the EU since mid-2004, fell 6.2 per cent to 1.11 million vehicles in June.

Four of Europe's five largest automotive markets shrank last month, with deliveries in Germany, the biggest, dropping 4.7 per cent, and demand falling 8.4 per cent in third-ranked France.

Sales in Ireland dropped by a staggering 73 per cent, the highest rate in Europe, according to the provisional figures. UK sales rose 13 per cent.

European registrations by Peugeot, the region's second- biggest carmaker, declined 11 per cent in June. Sales at Renault, based in the Paris suburb of Boulogne-Billancourt, gained 0.9 per cent as demand at its Dacia low-cost brand jumped 16 per cent. Turin, Italy-based Fiat posted a 14 per cent drop in European sales.

Renault chief executive Carlos Ghosn predicted earlier this month that the European car market will probably shrink further in 2014 and 2015 as rising joblessness continues to sap consumer demand.

Paris-based Peugeot is implementing a cost-cutting plan that includes eliminating about 11,200 jobs in France, or 17 per cent of its workforce in the country, as part of moves to reduce cash consumption by 50 per cent from the €3 billion posted last year.

General Motor's sales in Europe last month dropped 9.9 per cent, dragged down by a 23 percent plunge at the Chevrolet brand. Sales at the Opel and Vauxhall marques declined 7.2 per cent.

Volkswagen, Europe's biggest carmaker, posted a 4.4 per cent decline in sales in the region last month, with the biggest drop of 8.9 per cent its Audi luxury brand. European sales by Dearborn, Michigan-based Ford. advanced 6.9 percent in June. The manufacturer, which is forecasting a loss of about $2 billion in Europe for 2013, said last month that it's counting on new models such as the EcoSport compact sport-utility vehicle to reduce reliance in the region on low-margin sales to rental-car companies.

Bloomberg