European car market starts to recover.

20130815-171431.jpgThe European car market is showing the first signs of improvement as a recession ends in the 17 countries using the euro and deliveries in key regional markets begin to improve.

Ford Motor Co.’s deliveries last month in its 19 main European markets increased 9 percent from a year earlier to 90,000 cars, the company said today. “The worst is over,” Roelant de Waard, head of sales and marketing for the Ford of Europe division, said in a phone interview on Wednesday from the unit’s headquarters in Cologne, Germany. “It’s a bit early to say that we’re now on a way up. Certainly the outlook has improved.”

In July, new-car sales rose 2 percent in Germany and 1 percent in France. Both the UK and Spain reported double-digit rises at 13 percent and 15 percent, respectively. Even the monthly decline in Italy was the smallest this year, following a drop across the region in June to the lowest demand since 1996.

Gross domestic product in the euro area rose 0.3 percent in the three months through June, led by expansions in Germany and France, ending a six-quarter streak of contractions, the European Union statistics office in Luxembourg said on Wednesday.

Even so, new-car sales in Europe, including the non-EU countries of Switzerland, Norway and Iceland, are still projected to reach a two-decade low for the full year in a sixth annual drop.

“Markets are stabilizing in Europe and we will see some positive numbers in the second half,” Christoph Stuermer, a Frankfurt-based analyst at analyst IHS Automotive, said today. “The second half of the year will be better than the first as markets are bottoming out, yet the total year will remain negative.”

New-car sales in the region may fall to 12.1 million vehicles, 24 percent off the 2007 peak of more than 16 million deliveries, according to a forecast provided by IHS. The market research group projects a gradual recovery starting next year with a 3 percent gain. That prediction contrasts with a gloomier forecast by Carlos Ghosn, head of Renault and Nissan, who said in July that European demand may continue shrinking through 2015.

Any economic revival in the euro zone has yet to be matched by a recovery in hiring. Unemployment in the euro area remains at a record high of 12 percent, while governments have adopted spending-austerity strategies to reduce budget deficits and hold back state debt.

“The connection between economic performance, fiscal deficit and the car market is stronger than it’s ever been,” said Allan Rushforth, chief operating officer of Hyundai Motor Co.’s European business, in an interview on Wednesday at his office in the Frankfurt suburb of Offenbach. “Europe is a very mixed picture at the moment and it will remain so for some time to come.”

Registrations in western Europe increased to 950,444 cars in July from 914,274 a year earlier in the second regionwide monthly gain in 2013, researcher LMC Automotive estimated on Aug. 6.

The car-sales gain in France was the first in the country since October 2011, according to figures reported by the Ministry of Ecology.

Ford’s July sales in Europe were bolstered by demand for the Fiesta subcompact, Kuga compact SUV and B-Max subcompact minivan. The company said today that the gain was double the industry’s 4 percent expansion, taking the brand’s market share to 8.0 percent from 7.6 percent a year earlier in the fourth consecutive month of performance that beat the market average.

The U.S. company is among carmakers struggling to restore profit in Europe. Manufacturers have sought to counter the car market’s decline by offering discounts, and Ford doesn’t expect the strategy to end soon, de Waard said.

“I don’t see any relief on pricing pressure at the moment,” de Waard said. “It’s still very competitive.”

Volkswagen Group, Europe’s biggest carmaker, narrowed the sales decline of its namesake car brand in the region to 4 percent in July, according to figures derived by subtracting published first-half from seven-month numbers. VW’s European deliveries from January through July fell 7 percent from a year earlier to about 980,000 vehicles, the company said in a statement on Aug. 13.

“Given that the uncertain economic conditions will continue over the coming months, we are keeping a very close eye on developments in global automotive markets,” Christian Klingler, VW’s head of sales and marketing, said in the statement.

European first-half car sales fell 7 percent to 6.44 million vehicles, according to the Brussels-based ACEA industry group. The organization is scheduled to report figures for July and August registrations on Sept. 17.

SOURCES:
http://www.bloomberg.com
http://www.autonews.com/article/20130815/ANE/308159980/european-car-market-begins-rebound-as-economy-improves#ixzz2c3T9rBbq

Christopher Macgowan
twitter: chrismacgowan

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