Car sales in Europe return to growth after six years of decline

shift to cheaper brands such as Dacia and Skoda has been a factor. — Reuters file pic
shift to cheaper brands such as Dacia and Skoda has been a factor. — Reuters file pic

FRANKFURT, Jan 16 — European Union passenger car registrations rose 5.7 per cent in 2014, thanks to government incentives, tax breaks and a consumer shift to cheaper brands such as Dacia and Skoda that helped the market to return to growth after six consecutive years of declining sales.

An 18 per cent rise in demand in Spain and a 9.3 per cent increase in registrations in Britain took passenger car registrations to 12,550,771 deliveries in the European Union (EU), industry association ACEA said today.

But the jump in car sales was primarily driven by discounting, state-backed incentives and wholesale orders, rather than a recovery in consumer confidence.

“Not since the year 2000 have so few cars been bought by private individuals,” Peter Fuss, an automotive analyst at EY, said in a note today, referring to the fact that corporate and commercial purchases made up a large chunk of the sales.

In Spain, the government has repeatedly extended an incentive scheme, known as Plan PIVE, which offers price cuts on new low-emission vehicles. Under the scheme, people who scrap their old car and buy a new one get a reduction of €2,000 (RM8,347), half from the government and half from the carmaker.

“The European car market has bottomed out, but is only gradually emerging out of crisis mode,” Fuss said, adding that growth will slow in the coming year to around 3 per cent, to about 13 million cars.

In Western Europe, which includes the EU and countries belonging to the European Free Trade Association such as Norway, Iceland and Switzerland, registrations rose 5.4 per cent to 13,006,451 passenger cars, ACEA said.

Sales of value brand Dacia, which is owned by Renault, rose 23.3 per cent in 2014, while Volkswagen’s Seat division also had a 14 per cent sales increase, outpacing premium brands Audi, BMW and Mercedes, which grew less than 6 per cent.

France recorded a 6.8 per cent fall in registrations in December, as consumers continued to hold back on spending because of the uncertain outlook on the economy. Last month, France’s CCFA auto industry association said it saw no reason to expect the market to pick up in 2015.

December registrations in the European Union rose 4.7 per cent to 951,329 vehicles, and increased by 4.9 per cent in Western Europe to 997,238 cars, ACEA figures showed. — Reuters

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