European auto sales jump to nine-year high

  • Business
  • Wednesday, 18 Jan 2017

BERLIN: European car sales rose 6.5% to a nine-year high in 2016, propelled by pent-up demand amid a recovering economy, as French manufacturer Renault SA took advantage of market leader Volkswagen AG’s diesel-emissions scandal to leap from third place to second.

Registrations increased to 15.1 million vehicles last year from 14.2 million in 2015, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said Tuesday. Deliveries at Renault grew 12%, almost twice the market rate, as the company drew buyers with an updated lineup including a new Megane hatchback.

“Customers shifted from Volkswagen to other mass manufacturers, such as Renault and Fiat Chrysler,” said Commerzbank analyst Sascha Gommel.

“The main reason Renault sold more cars has do with its product cycle. They have a very young portfolio.”

The car industry’s European sales growth last year marked the third annual gain since a two-decade low in 2013 caused by the global recession and regional debt crisis.

Further expansion will probably slow sharply, as most buyers who waited to make big purchases now have new vehicles and the fallout from last June’s British referendum to exit the European Union erodes demand in that country.

“The macro environment remains mostly supportive, with a general recovery combined with low inflation, low interest rates, job creation and wage gains,” said Ian Fletcher, an analyst at research company IHS Markit who predicts “far more modest” car-sales growth this year and a flat market in 2018.

“Brexit is likely to start becoming a factor over the next couple of years.”

The European auto market also faces a structural shift that could prevent sales from reaching the 2007 peak. Young, urban residents are increasingly looking for alternatives to vehicle ownership, such as car sharing.

Renault overtook PSA Group, the Paris-based maker of Peugeot, Citroen and DS cars, to rank No. 2 last year in European auto sales, widening its market share to 10.1% from 9.6% in 2015. Sales were up in every European country, mainly due to new products such as the Espace crossover, the Talisman sedan and the Megane, the company said yesterday in a statement.

The French manufacturer expects demand for its main nameplate and Dacia-brand vehicles to grow further this year amid expanding global demand, including in countries such as India and China where car ownership is catching up with other large markets.

Renault’s worldwide sales rose 13% in 2016, compared with 4.6% across the sector.

Volkswagen, which is in the midst of a recall to fix diesel engines designed to cheat on emissions tests, remained on top of the European rankings at 24.1% of cars sold in the region in 2016.

A second consecutive monthly gain in December couldn’t prevent a 0.7 percentagepoint market-share decline for the full year as demand shrank at the main VW brand.— Bloomberg

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