New car sales in Europe fell 3.9 per cent in December, ending 2005 on a weak note despite a ferocious price war, a slew of fresh models and strong showings by most Japanese manufacturers, industry data showed yesterday.
The third consecutive month of waning sales offered scant hope that demand would pick up in 2006 and help relieve pressure on carmakers hit by high prices for energy and raw materials.
Declines in big markets Germany, Italy, France and Spain offset a rare rise in Britain in December, limiting new car registrations in 23 European Union countries plus Norway, Switzerland and Iceland to just below 1.1 million units.
"This drop was influenced by a smaller number of working days in almost all countries... but also confirms the sluggish market conditions in the last quarter," European car industry association ACEA said.
Full-year 2005 sales slipped 0.7 per cent to 15.2 million units as western Europe held nearly steady and an influx of used cars triggered a 10 per cent slump in eastern Europe.
The DJ Stoxx European car sector index, which lagged the broader market in 2005 after months of rare outperformance, slipped 0.5 per cent by 9.45 a.m. British time in a flat overall market.
Almost all Japanese carmakers continued to encroach on European companies' market share last month, while Korean manufacturers had unusually weak showings. Volkswagen outpaced the market and Renault continued to struggle.
Registrations for South Korea's Kia Motors slumped 28 per cent in December but advanced 39 per cent in 2005, giving it bragging rights as the fastest-growing brand in Europe as it overtook Suzuki and Mazda sales in the region.
Suzuki Motor Corp.'s December registrations rallied nearly 31 per cent, Honda Motor Co.'s sales gained 18 per cent and Toyota Motor Corp grew around 16 per cent, but Nissan Motor Co's sales tumbled 42 per cent despite an upturn in Britain, its biggest European market.
The British market - Europe's second-largest after Germany - contracted five per cent in 2005 as relatively high interest rates and flagging consumer sentiment took their toll. Germany, France and Spain managed to grow while the Italian market eased.
Analyst Stephen Cheetham at Sanford Bernstein forecast the European market would grow only 1.3 per cent in 2006 given feeble economic growth, consumer hesitance, a lack of pent-up demand and the low average vehicle age in all markets except Germany.
Toyota, rapidly gaining on General Motors Corp. in the race to be the world's largest automaker, boosted European 2005 registrations 3.9 per cent including its premium brand, Lexus.
Volkswagen, Europe's biggest carmaker, used solid sales at its core VW brand to remain top of the league tables in December, when group registrations edged down just 0.5 per cent to lock up a 21.2 per cent market share.
The group's full-year share rose to 19.3 per cent from 18.6 per cent in 2004 as only its Spanish brand Seat lost ground.