Renault, VW lead European car sales rally as recovery spreads

Thu Jan 16, 2014 5:40am EST
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By Andreas Cremer

BERLIN (Reuters) - Renault (RENA.PA: Quote), Volkswagen (VOWG_p.DE: Quote) and Ford (F.N: Quote) spurred European car sales to their strongest performance in four years in December, industry data showed on Thursday, as the sector's recovery spread to Mediterranean markets.

Registrations in the European Union and European Free Trade Association trading bloc jumped 13 percent from a year earlier to 948,090 vehicles, the fourth straight monthly gain, the Association of European Carmakers (ACEA) said.

Still, analysts cautioned that two extra working days in the five biggest markets Germany, Britain, France, Italy and Spain, accounting for over three quarters of sales in the region, triggered the massive December boost.

Italy, the region's fourth-biggest market, swung to growth of 1.4 percent, after shrinking for 11 months, as sales in all major markets increased. Greece and Portugal, victims of the euro zone's debt crisis, posted double-digit growth.

"The recovery process in Europe is seemingly taking hold," Matthias Wissmann, head of Germany's VDA auto industry lobby said. "People are building up trust again in the strength of economies."

This year, industry executives and analysts expect a return to low single-digit sales growth in Europe after six years of decline, but caution that chronic excess capacity, which has sparked a price war, will continue to dampen car makers' profitability.

"There were some early signs of green shoots in the final quarter" of 2013, Bernstein analyst Max Warburton said in a January 13 research note. "But it's patchy and far from sufficient to rescue the industry."

The December rally pared the sales decline for 2013 to 1.8 percent or 12.3 million cars, the sixth consecutive year of contraction but a more modest fall than many in the industry had feared earlier in 2013.   Continued...

A worker cleans a Renault car at the European Motor Show in Brussels January 14, 2014. REUTERS/Francois Lenoir