European Auto Sales Jump to Nine-Year High as Renault Gains

Updated on
  • Registrations rose 6.5% to 15.1 million cars, association says
  • Fiat Chrysler jumped 14% to take market share from Volkswagen

Customers inspect the interior boot space of a new Renault Megane automobile for sale inside a Renault SA dealership in Madrid.

Photographer: Angel Navarrete/Bloomberg

European car sales rose to a nine-year high in 2016, with French manufacturer Renault SA taking advantage of recovering demand and Volkswagen AG’s tarnished reputation to leap to second place from third in the region.

Industrywide registrations increased 6.5 percent to 15.1 million vehicles, the highest level since the 2007 peak, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said Tuesday. Regional leader Volkswagen lost market share with a 3.3 percent sales gain as demand at its namesake brand declined amid the fallout of the emissions-cheating scandal.

Renault’s deliveries surged 12 percent by wooing buyers with an updated lineup including a new Megane hatchback, helping it push past French rival PSA Group. Fiat Chrysler Automobiles NV was the fastest growing major carmaker last year with a 14 percent gain on demand for Jeep models.

“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.”

Growth Slowing

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 consumers who waited to make big purchases now have new vehicles and the fallout from the Brexit vote threatens to erode U.K. demand.

The region’s auto market is set to show “far more modest” growth this year, with demand flat in 2018, said Ian Fletcher, an analyst at research company IHS Markit. “Brexit is likely to start becoming a factor over the next couple of years.”

Europe also faces a structural shift that’s likely to prevent sales from returning to the 2007 peak for the foreseeable future. Young, urban residents are increasingly looking for alternatives to vehicle ownership, such as car sharing.

Renault widened its market share to 10.1 percent, overtaking PSA, the Paris-based maker of Peugeot, Citroen and DS cars, which slumped to 9.7 percent. While PSA is narrowing its lineup to boost profitability, Renault said sales were up in every European country, mainly due to new products such as the Espace crossover, the Talisman sedan and the Megane.

The French manufacturer expects sales of its namesake Renault brand and the budget Dacia nameplate to grow further this year amid expanding demand in India and China. Renault’s worldwide sales rose 13 percent in 2016, compared with 4.6 percent across the sector.

Volkswagen, which is in the midst of a recall of rigged diesel cars in Europe, remained on top of the European rankings at 24.1 percent of cars sold in the region in 2016, compared with 24.8 percent the previous year. The company managed to pare the decline thanks to a second consecutive monthly market-share gain in December.

Brexit Lag

The U.K. posted the slowest gain of Europe’s five biggest car markets, rising 2.3 percent in 2016, and this year is likely to get worse. Demand in Britain is forecast to contract as much as 5 percent as carmakers raise prices in response to the pound’s plunge in the wake of the Brexit referendum and the economy slows, according to research company LMC Automotive. 

Sales across the region will probably grow 1.8 percent in 2017 and 1 percent in 2018, LMC said. The ACEA compiles numbers from the European Union’s 28 member countries, excluding Malta, plus Switzerland, Norway and Iceland.

“The market is still growing, but a little more slowly,” said Jonathon Poskitt, an analyst at LMC.

— With assistance by Ania Nussbaum

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