Peugeot, Renault Sales Slump As French Car Market Contracts In March

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The FINANCIAL — Registrations of new cars made by PSA Peugeot Citroen and Renault SA fell 30% or more in March compared with the same month a year ago as the French auto market continued to contract amid sluggish demand exaggerated by a government subsidy on replacing old vehicles phased out last year.


The overall French market, Europe's biggest after Germany, shrank 24% to 197,033 vehicles compared with a 20% drop in February, the French car maker association CCFA said. Adjusted to take into account one fewer working day in March 2012, the market contracted 20%. New car registrations over the first quarter fell 22% on the year.

The slump in demand for new cars confirms declining sales across most of the region so far this year which has piled on pressure on many of Europe's volume auto manufacturers, notably Peugeot. According to Borsa Italiana – London Stock Exchange Group, the family-controlled company last month announced an emergency EUR1-billion capital increase in tandem with a wide-ranging cost-sharing alliance with General Motors. GM itself is in talks with labor unions about restructuring its Opel/Vauxhall unit which could involve the closure of one or two factories in Europe, according to people will familiar with the negotiations.

Peugeot's registrations fell 33% in March to 59,290, while local rival Renault suffered a 30% drop to 42,908 cars, with a particularly sharp fall in registrations for its low-cost Dacia brand, down 57%. GM's registrations fell 26% to 11,680 cars.

As well as an unfavorable comparison with last year's data boosted by a car scrappage subsidy, which applied for cars registered until the end of March 2011, France's stubbornly high unemployment rate of near 10% and uncertainty ahead of France's presidential elections due later this month are putting customers off from making big-ticket purchases like cars, said Dominique Barbet, an economist at banking group BNP Paribas SA (BNP.FR).

The French car makers' association said the worst might be over for the French market. It is sticking to a forecast of an 8% to 10% decline in the market this year to around 2 million new cars.

Year-on-year comparisons will no longer be distorted by the sales related to the scrappage scheme, consumer sentiment is improving in France, and Peugeot and Renault will be refreshing their line-ups of new models later in the year, CCFA spokesman Francois Roudier said. The French national statistics bureau Insee last week said its index of consumer expectations in March was at its highest level in more than a year.

France's two auto makers suffered more in March than foreign car makers which registered a decline of only 12% from March last year. Peugeot's French market share fell to 30% from 35% a year before. Renault's market share fell slightly to just below 24%.

Registrations of Hyundai and Kia cars made by South Korean manufacturer Hyundai Motor rose 43% to 5,838 cars while registrations for Daimler AG's Mercedes-Benz brand jumped 29% to 4,745 cars.



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