PSA Peugeot Citroen and Toyota led European car sales 10.3 per cent lower in March, as an unrelenting market contraction spreads to the region’s more prosperous north, unnerving automakers.
Registrations dropped to 1.35 million cars last month from 1.5 million a year earlier, the Association of European Carmakers said yesterday. That completed a near 10 per cent decline for the first quarter that has prompted industry bosses to trim their 2013 sales outlooks and prepare the ground for possible profit warnings.
Defying earlier industry predictions of a second-half rebound, European car sales are headed for a sixth straight annual decline to a two-decade low, threatening to undermine the best-laid turnaround plans and survival strategies. While France’s Peugeot was among March’s biggest casualties, with a further 16.3 per cent sales slump it can ill afford, European No. 1 Volkswagen AG posted a 15 per cent year-on-year decline for its namesake brand as the German market shrank even more sharply.
Domestic sales are “still a critical driver of German (carmaker) earnings and the current trend is quite disturbing”, Bernstein analyst Max Warburton said in a note to clients this week. “The risk is that Europe remains structurally very weak for many years.”
It is a worrying prospect, and not just for Peugeot – which is cutting 8,000 jobs and a domestic plant to stay afloat. Chief executive Philippe Varin says the outlook has worsened since the company forecast a European market decline this year of between three and five per cent.
Ford Motor Co, also scrapping European plants and thousands of jobs, lost more ground as its sales tumbled 15.9 per cent in March, eroding its quarterly market share to 7.3 per cent from 8.2 per cent.
Ford emphasised an increase in consumer market share as it reins in loss-making fleet sales to businesses, but said the eurozone’s worsening conditions and unemployment were a serious concern.
“There was a lot of hope that the second half would start to see some gradual improvement,” Ford of Europe president Stephen Odell explained to Reuters Insider TV yesterday.
“But with unemployment at 12 million in the euro area, it doesn’t feel like we’re going to see that just for a while.”
Asked whether Ford was considering more cutbacks, Odell said the US carmaker had “nothing new to announce” at this stage.