Europe Car Sales Rise Most Since 2011 on Spain Incentives

Photographer: Krisztian Bocsi/Bloomberg

BMW i3 battery-powered vehicles pass along the assembly line in Leipzig. BMW, the world’s biggest maker of luxury cars, sold 6.4 percent more vehicles in Europe last month. Close

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Photographer: Krisztian Bocsi/Bloomberg

BMW i3 battery-powered vehicles pass along the assembly line in Leipzig. BMW, the world’s biggest maker of luxury cars, sold 6.4 percent more vehicles in Europe last month.

European monthly car sales rose the most in more than two years as the end of a recession in the region, price cutting and a government incentive program in Spain helped lift demand.

Registrations in September jumped 5.5 percent to 1.19 million vehicles, the Brussels-based European Automobile Manufacturers Association, or ACEA, said today in a statement. That narrowed the decline this year to 4 percent, for total deliveries of 9.34 million cars.

Renault SA (RNO) and Daimler AG (DAI) posted the biggest gains last month as an economic recovery in the region spurred consumer spending. Demand surged 29 percent in Spain because of government-backed discounts of as much as 2,000 euros ($2,700) on vehicle trade-ins. Dealer rebates in Germany were the highest in three months.

“The European market is bottoming out and the next months will probably see a slow improvement,” said Frank Schwope, a Hanover, Germany-based analyst with NordLB. “After refraining from buying a new car because of the economic crisis, vehicles are now so old that they can’t be repaired any more and need to be replaced.”

September European sales at Renault, based in the Paris suburb of Boulogne-Billancourt, rose 22 percent, while Stuttgart, Germany-based Daimler, the third-biggest maker of luxury vehicles, reported a 12 percent increase. Demand at regional market leader Volkswagen AG (VOW) climbed 5.8 percent.

Improving Market

The industrywide gain in September, which included one more working day than a year earlier, was the biggest since a 7.8 percent jump in August 2011 and the third for this year. Still, deliveries -- which include European Union members as well as Switzerland, Norway and Iceland -- are set to contract in 2013 for a sixth consecutive year and hit a two-decade low.

“The situation is clearly improving,” Carlos Da Silva, a Paris-based analyst with IHS Automotive, said in an e-mail. “Europe is not in brilliant shape, yet the underlying trend of the market is calling for a certain dose of optimism.”

Among the region’s five biggest markets, Spain posted the largest increase. Sales rose 12 percent in the U.K., where consumer confidence was at a six-year high in September, and climbed 3.4 percent in France. Registrations fell 1.2 percent in Germany, Europe’s biggest economy, and 2.9 percent in Italy.

Dacia’s Surge

Renault’s deliveries were helped by a 40 percent surge at the no-frills Dacia brand, which entered the U.K. in 2013. Dacia in the last two years has introduced new versions of the Sandero hatchback and Logan sedan, while the namesake marque has brought to market its first compact crossover, the Captur, as well as a revamped Clio hatchback.

Daimler’s delivery gain was propelled by a 14 percent jump at the Mercedes-Benz brand, which added the CLA four-door coupe in April as part of a compact-car push. The vehicles include a new version of the van-like B-Class and a redesigned A-Class hatchback. The German carmaker also presented an overhauled S-Class sedan in May and brought a revamped upscale E-Class to market in April.

Growth last month at Wolfsburg, Germany-based Volkswagen included gains of 2.1 percent at the main VW brand, 3.2 percent at the luxury Audi division, 17 percent at the Skoda unit and 16 percent at Spanish nameplate Seat. New versions of VW’s best-selling Golf hatchback and Audi’s Q3 and Q5 sport-utility vehicles helped boost sales.

Peugeot Decline

Carmakers reporting European sales declines last month included Paris-based PSA Peugeot Citroen (UG), the region’s second-biggest auto producer, with a 3 percent drop, and Turin, Italy-based Fiat SpA (F) with a 3.4 percent slide.

Peugeot is targeting a “clear” increase in market share in the fourth quarter as new vehicles such as the 2008-model urban crossover and 308 hatchback attract customers, Chief Financial Officer Jean-Baptiste de Chatillon said in an interview today. The company, which is reorganizing to stem losses amid the European car-market contraction, has “absolutely no problem of liquidity or financial security” as it looks to add industrial partnerships, he said.

The French automaker accounted for 10.9 percent of Europe’s car market in the first nine months of 2013, a drop from 13.1 percent for all of 2007, the last year of industry growth. An Austrian Peugeot dealer, Gerhard Wiesinger GmbH, filed for bankruptcy protection today, citing the “massive collapse” of the car market, according to the Vienna-based AKV creditors lobby group.

German Rebates

September dealer rebates in Germany rose to an average 12 percent off the sticker price from 11.6 percent in August, the highest level since June, according to industry publication Autohaus PulsSchlag. The best deals were available on Peugeot and Renault cars, with combined average discounts of 14.9 percent. Fiat offered incentives equivalent to 13.7 percent off the list price.

“The low interest rates are pushing sales,” said Fabian Schmidt, sales manager at Cologne, Germany-based dealer AK Autoport Koeln GmbH. “The zero-percent financing offer for Seat models, for example, clearly pulls in customers. We’ve registered more showroom traffic in the past four to six weeks.”

European sales by Detroit-based General Motors Co. (GM) rose 5.4 percent, with its main Opel and Vauxhall brands in the region reporting a combined 5.5 percent increase. Ruesselsheim, Germany-based Opel started production of the latest version of the mid-sized Insignia in August, adding to a lineup of new vehicles that includes the Mokka compact SUV and Adam city car.

Ford Motor Co. (F) posted a 5 percent gain in sales in the region, while Bayerische Motoren Werke AG (BMW), the world’s biggest maker of luxury cars, sold 6.4 percent more vehicles last month.

Improvement ‘Signs’

“Car sales in the EU are showing signs of improvement, indicating that the worst is behind us,” Peter Fuss, a partner at Ernst & Young consulting company in Frankfurt, said in an e-mail. “The sales, however, continue to be artificially boosted by huge discounts and self-registrations by dealers.”

Toyota Motor Corp. (7203), which ranks ninth in European sales, posted a 6.1 percent registration gain in the region last month. Seoul-based Hyundai Motor Co. (005380), which holds 10th place in European auto deliveries, sold 6.4 percent more vehicles.

“Early signs of improving industry performance in key European markets lead us to remain optimistic for the final quarter of this year,” Allan Rushforth, head of Hyundai’s European business, said in an e-mail. “We anticipate market growth of around 3 percent in 2014.”

To contact the reporter on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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