European Auto Sector Hits 17year Low

European Auto Sector Hits 17-year Low

New car registrations in the European Union fell by 8.2% from the 2011 level to 12.05 million units last year, the European Automobile Manufacturers' Association said, but the fall in Germany was just under 3%.

PARIS -- Revealing the dire state of the sector despite the global strength of German automakers, European auto sales plunged to the lowest point for 17 years in 2012, trade data showed on Wednesday.

The figures came only hours after French manufacturer Renault (IW 1000/78) announced the latest job cuts and restructuring in the European car industry. The company said it would shed 7,500 French jobs, or about 17% of its workforce by 2016.

Renault, which has diversified its manufacturing into low-cost countries close to Western Europe in recent years, notably in Romania where it builds its Dacia-branded vehicles, said that an agreement with unions would save it 400 million euros (US$534 million) in overhead and would avert any plant closures.

"On the basis of a progressive recovery of the European market, establishing such an agreement would allow for growth in French output that is more sustained than that of the European market," Renault said.

New car registrations in the European Union fell by 8.2% from the 2011 level to 12.05 million units last year, the European Automobile Manufacturers' Association said, but the fall in Germany was just under 3%.

PSA Peugeot Citroen (IW 1000/47), the second-biggest carmaker in Europe after the booming W group, has just had its financing arm rescued by the state. The group is restructuring with 8,000 job cuts and targets development abroad after a government report said its strategy had missed the bus of globalization.

And on Wednesday, French car parts maker Faurecia (IW 1000/207) reported weak profits and a surge of its debt, blaming a sharp fall in car production for pushing up the cost of holding inventories.

By contrast the VW group has reported record global sales for 2012 with a rise of 11% to 9.07 million units and aspires to being the biggest manufacturer globally, ahead of  Toyota, by 2018. And Daimler (IW 1000/18) said at the Detroit auto show this week that it is on track to be the world's top luxury carmaker by the end of the decade.

The second-biggest manufacturer globally is General Motors (IW 500/4), which struck a strategic partnership with PSA this year, but GM's sales across the whole of Europe fell by 8.2% last year.

Markets Vary by Country

In some countries the market, and employment, were supported after the financial crisis hit economies in 2008 by government subsidies for the replacement of old vehicles with new ones but these schemes have run out and many European groups have announced job cuts and plant closures.

However the European trade data for the year showed big differences between countries. Car sales rose only in Britain, by 5.3% from the level in 2011.

In Germany, a fall in sales on the home market was contained to 2.9% but in France sales slumped by 13.9%, in Spain by 13.4% and in Italy by 19.9%.

In terms of brands, sales in Western Europe by PSA Peugeot Citroen fell by 12.9%, by Renault 18.9% and by Fiat of Italy by 15.8%.

Sales by Opel, based in Germany but owned by General Motors which has recovered strongly from bankruptcy, fell by 15.6%.

However, other German brands did far better. Sales by Audi (IW 1000/69) rose by 3.7%t, and by BMW (IW 1000/36) they slid by 0.1% and by Mercedes-Benz by 0.9%.

In terms of sales in Europe by foreign manufacturers, the South Korean group Hyundai-Kia( IW 1000 54) raised sales under the Hyundai name by 9.4% and under the Kia brand by 14.6%.

 -  Hugh Dent, AFP

Copyright Agence France-Presse, 2013

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