April 16, 2015 / 11:35 AM / 2 years ago

Mid-market car brands surge with European market upturn

Volkswagen Golf VII cars are pictured in a production line at the plant of German carmaker Volkswagen in Wolfsburg, March 3, 2015. REUTERS/Fabian Bimmer

PARIS/MILAN (Reuters) - Europe’s auto-market recovery gained a firmer footing in March, industry data showed on Thursday, as a sharp recovery in some mid-market brands eclipsed growth in no-frills “crisis cars”.

After months of hesitant growth, there were solid gains in the five biggest markets: Germany, Britain, France, Italy and Spain, as consumer confidence improves on the back of greater job security, lower energy prices and the EU’s money-printing stimulus program.

Total registrations rose 10.8 percent to 1.65 million cars across the region, the Brussels-based Association of European Carmakers said, taking the first-quarter expansion to 8.5 percent.

“Customers and manufacturers are happy. It has been a long time since we last experienced this situation in Europe,” said Carlos Da Silva, an analyst at forecaster IHS Automotive, adding the trend of private demand finally picking up would also help the mix of vehicles being sold and overall pricing.

Mid-market models, which had suffered most in a prolonged slump ending last year, outpaced the budget stablemates that had eclipsed them during the crisis, when frugality reigned.

Among specific brands, Renault (RENA.PA) saw sales jump 11.6 percent, while the French carmaker’s low-cost Dacia cars posted a lesser gain of 7.5 percent.

A 6.4 percent sales increase at Volkswagen’s (VOWG_p.DE) spartan Skoda division was outshone by the core VW brand, which saw registrations surge 11.5 percent. Even Fiat Chrysler’s (FCHA.MI) downtrodden Fiat lineup produced 13.7 percent growth.

New launches from the likes of Renault and Fiat Chrysler were also helping and should support sales for months to come, analysts said.

“People may not have bought a car for a few years and may be more open to switching brands, so having the right product is key now,” said George Galliers at Evercore ISI.

Ford (F.N) recorded a gain of 8.9 percent in March and 7.4 percent for the quarter, after years of European pain, while U.S. rival General Motors (GM.N) recorded a more modest 4.3 percent gain for its European marques Opel and Vauxhall.

GM nonetheless predicted last week that rebounding European demand would power a return to regional profit in 2016, offsetting deep losses in Russia.

But the recovery would remain gradual, Galliers said: “We don’t foresee the market climbing back to prior peak levels in the next 12 to 18 months, that will take longer.”

Editing by David Holmes

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