Europe’s car market shrinks by 6%

Europe’s car market shrank by 6 per cent in December, according to data published on Tuesday, capping a difficult year for the industry in which the EU’s car market contracted by nearly 2 per cent.

According to the European automakers’ association Acea, 953,108 cars were registered in European Union countries last month, the biggest monthly decline since June, when they dropped by 8 per cent. Car registrations fell by 3.5 per cent in November.

The data underscore the toll the concerns about possible defaults by one or more Eurozone countries are beginning to take on consumer confidence and one of the continent’s biggest industries.

December’s market slump was sharpest in the Eurozone countries at the heart of the debt crisis. Registrations of new cars contracted by 15 per cent in Italy during December, 18 per cent in France, and 60 per cent in Portugal. Germany was the only big EU country that saw car registrations rise during the period – up 6 per cent, according to Acea.

For all of last year, 13.1m cars were registered in the EU, 1.7 per cent fewer than in 2010, Acea said.

France’s two carmakers, PSA Peugeot Citroën and Renault – the two mass-market producers most exposed to countries seen at risk of default – reported the biggest slide in their 2011 sales, down 9 per cent and 8.4 per cent respectively.

Both groups are striving to build their sales outside western Europe and sell more high-end vehicles in an effort to reduce their reliance on the brutally competitive small-car market at home, where many automakers and dealers are cutting prices in order to compete.

Renault on Tuesday sought to put a positive spin on its performance last year when it reported record global sales of 2.7m cars and light commercial vehicles, up 3.6 per cent on 2010.

Despite its declining sales and share at home, the company sold 43 per cent of its vehicles outside Europe – up from 37 per cent the previous year – and its non-European sales were 6.8 per cent higher than in 2010. Brazil is now Renault’s second-largest market after France, and Russia and Turkey are its fourth- and fifth-biggest.

Carmaking groups and industry analysts forecast that Europe’s car market will shrink by as much as 10 per cent this year as consumers hold off on paying for big-ticket items such as cars.

Renault said that it expected Europe’s car market to decline by 3 to 4 per cent overall this year, and 7 to 8 per cent in France.

Volkswagen was the only big mass-market carmaker with higher sales in Europe last year, according to Acea. VW sold more than 3m cars in the EU, 7.5 per cent more than in 2010, with higher registrations of cars made under both its flagship brand and its Audi, Seat and Skoda marques.

South Korean producers Hyundai and Kia, which are quickly expanding their small share of the European market, both recorded gains of more than 10 per cent in car registrations last year.



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