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backEUROtalk April, 2012

Despite economic woes, Europe isn’t yet a cheap car market

New-car sales in Europe are expected to decline about 5 percent to 7 percent this year, but they are off to an even worse start in the first two months.

In February, sales fell 9.2 percent to 923,381 in the EU plus Switzerland, Norway and Iceland compared with the same month in 2011, according to industry association ACEA.

The February decline was steeper than January’s 6.6 percent drop. In the first two months, European sales are down by 7.8 percent to 1.93 million units, equivalent to 164,000 customers lost in the period.

Kia and Chevrolet were the only two mass-market brands that showed strong growth last month. Kia’s volume rose 31.4 percent to 22,610. Chevrolet sales were up 17.3 percent to 15,248. Both brands sell low-priced cars largely built in South Korea.

Is the eurozone crisis creating a market where only cheap models win buyers?

Not exactly. Sales at Renault’s Romanian subsidiary Dacia, which sells low-cost, no-frills cars were down by 5.4 percent to 17,684 in February.

Moreover, the three brands which showed biggest sales gains last month were not low-cost marques.

• Lexus increased sales by 72 percent to 1,627, thanks to the CT 200h entry-premium hybrid car, which starts at about 30,000 euros.

• Land Rover’s volume rise of 69.8 percent to 6,111 was fueled by booming sales of the Evoque medium-premium SUV, which starts at 38,000 euros.

• Jeep sales grew 58.1 percent to 2,257, pushed by its most expensive model, the 45,000-euro Grand Cherokee large-premium SUV, which tripled sales in the month.

All European volume brands lost ground in February, mostly mirroring the performance of their domestic market.

Volkswagen brand fell by 1.2 percent to 119,130. The flat German market helped limit the decline. As sales dropped in the rest of Europe, VW increased its European share by 1 percentage point to 12.9 percent

The French market declined by 20.2 percent, affecting sales of Renault’s namesake core brand, which fell 27.3 percent to 68,718. PSA/Peugeot-Citroen’s European volume was down 16.5 percent to 118,381.

• Sales of Fiat brand cars fell 18.3 percent to 46,671, a drop that almost perfectly mirrored Italy’s 18.9 sales slump

• Opel/Vauxhall sales slid 19 percent to 58,573, much more than the overall declines in its two biggest markets, the UK, where industry volume fell 2.5 percent, and in the flat German market.

• Japanese volume brands lost volume and share in February. Nissan sales were down 9.4 percent to 31,097 compared to a 9.2 percent market decline. Mitsubishi was the worst performer with a 35.2 percent decline to 6,248.

Among the German premium brands, only Mercedes-Benz had reason to be pleased. Mercedes’ sales rose 6.8 percent to 39,620. Audi sales were down 2.7 percent to 45,187. BMW brand sales fell 3.2 percent to 39,905.

Source: Automotive IQ - GAI

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