By Dow Jones Business News,
December 17, 2013, 03:55:00 AM EDT
European Auto Registrations Rise
Registrations of new cars rose in Europe for the third month in a row in November, reassuring auto makers that the
near six-year slump is behind them.
The figures also reinforced Volkswagen AG's position as Europe's dominant manufacturer. More than one in every four
cars registered in the European Union was made by the German group.
The European car market's recovery remains sluggish, with new EU car registrations up 1.2% to 938,021 vehicles,
according to the European Automobile Manufacturers' Association. The association noted that the November figure was the
third lowest for the month since 2003.
New registrations so far this year for the broader European market, including Iceland, Liechtenstein, Norway and
Switzerland, were down 2.8% to 11.4 million cars.
The European market is still nearly a quarter smaller than it was in 2007 when 14.8 million new cars were registered.
Growth next year is likely to be only around 4%, according to Stefan Bratzel at the University of Applied Sciences at
The long-term shrinkage, as Europe's financial crisis has led to slack growth and rising jobless rates in many
countries, has left most of Europe's mass-market auto makers with underused factories and reliant on discounts to lure
customers into show rooms to buy new vehicles.
One result is the hefty losses for the year expected at PSA Peugeot-Citroën, still reliant on Europe for most of
its sales, and the European operations of Italy'sFiat SpA, Ford Motor Co. and General Motors Co.Peugeot is due to
close a factory near Paris next year. Ford closed its car plant in Belgium earlier this year. Opel, GM's Germany-based
unit, is due to close a plant next year.
"The European market is still far away from a real recovery. Southern European countries especially will continue to
suffer very high unemployment, which will leave its mark on weak new car sales," said Peter Fuss, an auto sector analyst
at management consultancy E&Y.
Growth in Volkswagen's EU registrations of 3.3% to 242,344 vehicles took its market share back above 26% in November,
putting the German auto maker well ahead of nearest rival Peugeot-Citroën, with a 10.8% share, and Renault SA, with
Volkwagen's strong balance sheet, allowing the company to offer competitive financing, its wide array of premium and
mass-market brands and its reputation for making low-risk products have served it well during the crisis.
But this year could prove the high-water mark for Volkswagen in Europe, said Arndt Ellinghorst, an analyst at
International Investment & Strategy.
Ford, Opel, Peugeot and Renault have new models in showrooms which when combined with an array of cost-cutting
initiatives--from new labor agreements to plant closures--leave them relatively well placed to meet pent-up demand for
new cars. Japanese auto makers, benefiting from the yen's weakness against the euro, look better positioned too. Toyota
Motor Co.'s November EU registrations rose 7.3%.
Volkswagen management may not be unduly concerned by a slight future decline in market share, said Mr. Ellinghorst. "
Instead of chasing up the last customer in Europe, Volkswagen's focus is more likely expanding into Southeast Asia,
growing in Latin America and getting its act together in the U.S."
Volkswagen officials didn't respond to requests for comment. Last Thursday, the group replaced the head of its U.S.
operation after several months of slumping sales for the auto maker's VW brand.
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