Europe Car Sales Rise a Fifth Month on Volkswagen Models

European car sales rose a fifth consecutive month in January as the start of an economic recovery in countries sharing the euro encouraged purchases of models such as Volkswagen AG’s Golf hatchback and Audi A3 sedan.

Registrations increased 5.2 percent from a year earlier to 967,800 vehicles, the Brussels-based European Automobile Manufacturers Association, or ACEA, said today. That compares to a 13 percent jump in December sales. The stretch of gains is the longest since a 10-month period ended in March 2010.

Carmakers are forecasting a gradual revival in European sales in 2014 after demand last year fell to the lowest since 1995. The five biggest markets all posted gains last month. Growth was propelled by new models at VW and its premium Audi brand, as well as by Renault SA’s Captur compact crossover and Dacia Sandero hatchback and Ford Motor Co.’s Fiesta small car.

“After a period where survival became the key word for many players in the industry, we are finally entering the revival phase,” Carlos Da Silva, a Paris-based auto analyst at market research company IHS Automotive, said in an e-mail. “We are not using the words ‘rebound’ or ‘rebirth’ on purpose here. The fact is, we anticipate a quite winding road ahead.”

Volkswagen’s group European sales jumped 8.2 percent last month. All of the main divisions at the Wolfsburg, Germany-based company, the region’s biggest carmaker, reported registration gains, including growth of 7.6 percent at the VW nameplate, 8.5 percent at Audi and 10 percent at the Czech brand Skoda.

Dacia’s Surge

European sales at Renault, which ranks third to Volkswagen and PSA Peugeot Citroen in deliveries in the region, jumped 13 percent last month, including a 38 percent surge at the low-cost Dacia marque. The company, based in the Paris suburb of Boulogne-Billancourt, was one of only two manufacturers among the top 10 auto sellers in the region to report full-year sales growth in 2013.

Deliveries by Paris-based Peugeot increased 6.9 percent last month as the 308-model hatchback attracted buyers. The company’s board is meeting today to decide whether to sell large stakes to the French state and Chinese partner Dongfeng Motor Corp. as part of a 3 billion-euro ($4.1 billion) program to finance an earnings recovery.

Lobby’s Forecast

The ACEA compiles figures for the European Union plus Switzerland, Norway and Iceland. The January numbers for the first time include Croatia, which became the 28th EU country in mid-2013. The carmakers’ association is forecasting that auto sales in Europe will increase 2 percent this year.

Registrations in Germany, the biggest European car market, advanced 7.2 percent in January. Demand rose 7.6 percent in both the U.K. and Spain, while increasing 3.2 percent in Italy and 0.5 percent in France.

Gross domestic product in the euro area rose in the final three months of 2013, the third straight quarter of growth following an 18-month recession. Unemployment in the euro zone was at about 12 percent at the end of last year, with the jobless rate among young people at about 24 percent.

“We expect unemployment in the euro zone to start easing in the middle of the year to assist confidence in car buying,” said Jonathon Poskitt, an Oxford, England-based analyst at research company LMC, said by phone. “As the economy picks up, people will become more confident in making larger purchases and this will help drive the car market forward.”

Spanish Incentives

Spanish demand for cars has been boosted in recent months by a cash-for-clunkers sales incentive program renewed by the government in October. Dealer discounts in Germany averaged 11 percent in January, the lowest level of price cutting in the past two years, according to trade publication Autohaus PulsSchlag.

“We’re on the road to recovery,” Allan Rushforth, chief operating officer of Hyundai Motor Co.’s European division, said in a statement. “The question, is how much of that recovery is organic and how much is the result of actions taken by governments and carmakers.”

Peugeot and Renault together were the second-biggest car discounters in Germany last month, with price cuts averaging 12.1 percent, according to Autohaus PulsSchlag. Dearborn, Michigan-based Ford lowered its prices more than other competitors in Germany with a 12.3 percent reduction, the magazine said.

Boosting Production

Ford’s European sales last month rose 8.8 percent, the ACEA figures showed. The manufacturer said in January that it’s increasing the Fiesta’s production at its plant in Cologne, Germany, to meet demand. Stephen Odell, who runs Ford’s business in the region, predicted last month that the auto market is set to expand this year as customers replace aging vehicles.

“The general economic environment is improving, which will help car sales,” Sascha Gommel, a Frankfurt-based analyst at Commerzbank AG, said by phone. “Leasing and financing deals will probably become more attractive and spur vehicle purchases given that refinancing costs are coming down also in Italy and France.”

The main brand of Bayerische Motoren Werke AG, the world’s biggest maker of luxury autos, boosted European sales 1.4 percent, helped by demand for the X3 sport-utility vehicle and the introduction of the 4-Series coupe.

Mercedes-Smart Contrast

Deliveries in the region by Stuttgart, Germany-based Daimler AG fell 0.3 percent as a 1 percent increase at the Mercedes-Benz brand, the world’s third-largest premium-auto manufacturer after BMW and Audi, was overwhelmed by an 11 percent drop at the Smart city-car division, which is introducing two models later this year.

Mercedes is seeking sales growth with compact models that include the CLA coupe, A-Class hatchback and van-like B-Class. The GLA small SUV will join that line-up in March.

Among Asian auto producers, European sales gains exceeded 15 percent at Toyota Motor Corp. and Mazda Motor Corp. Seoul-based Hyundai posted a 5.5 percent decline.

European sales at General Motors Co.’s Opel and Vauxhall nameplates, which have a target of jointly becoming the second-biggest auto brand in Europe, fell 7.8 percent last month. Fiat SpA’s group deliveries declined 1.8 percent, with drops of 2.8 percent at the namesake brand and 20 percent at the Alfa Romeo division.

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