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European Auto Sales Rise at Slowest Pace in Five Months

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European car sales rose at the slowest pace in five months in April as doubts about economic growth in the region contributed to a drop in Germany.

Registrations increased 4.2 percent to 1.13 million vehicles from 1.08 million a year earlier, the Brussels-based European Automobile Manufacturer’s Association, or ACEA, said today. Four-month sales gained 7.1 percent to 4.48 million cars.

Economic expansion in the countries sharing the euro has been unsteady since a record 18-month recession ended a year ago, with Italy posting a drop in the first quarter. Car-sales growth in April was pushed by gains of 16 percent at Renault SA (RNO), 8.7 percent at Ford Motor Co. (F) and 5.2 percent at PSA Peugeot Citroen (UG), though the industry increase was held back by a decline at the namesake brand of market leader Volkswagen AG. (VOW)

“We are not seeing a real recovery in the car market in Europe, just a modest rebound,” Gian Primo Quagliano, head of automotive-research company CSP in Bologna, Italy. “Europe needs economic measures to boost consumption and bring back customers into showrooms.”

Renault’s no-frills Dacia nameplate, which has revamped the Duster sport-utility vehicle and Sandero hatchback, posted a 34 percent surge in April sales in Europe. The French company’s main brand, which has attracted buyers with the Captur crossover brought out a year ago, sold 9 percent more autos.

SUV Production

European sales at the Peugeot marque rose 6.1 percent, with demand at the Citroen division increasing 4 percent. The Paris-based carmaker, Europe’s second-biggest, said in early April that it’s raising production of the 2008 compact SUV by 25 percent as orders soar for the model.

Group sales by Wolfsburg, Germany-based Volkswagen rose 4.1 percent in Europe. Jumps of 22 percent at the Skoda brand and 6 percent at the Seat nameplate more than made up for a 0.5 percent slide at the VW marque, which is revising its midsize Passat sedan later this year. The Audi luxury division, which overhauled its flagship A8 sedan and compact A3 line last year, posted a 0.7 percent sales gain.

The ACEA compiles figures from the 28-country European Union, excluding Malta, as well as numbers from Switzerland, Norway and Iceland. Automaking executives in the region are predicting industrywide delivery growth of 2 percent to 3 percent for 2014, following a six-year contraction to a two-decade low in 2013.

The increase last month was the slowest since November, with demand hurt by the Easter holiday shifting into April this year. The period took place partly in March in 2013.

Spanish Surge

Germany, Europe’s largest market, was the only country among the top five in the region to post a decline last month, with a 3.6 percent drop. Demand surged 29 percent in Spain, which ranks fifth in Europe, and rose 8.2 percent in the U.K., the No. 2 market.

“We shouldn’t take April figures as a general trend in Europe,” Tim Urquhart, an analyst at IHS Automotive in London, said by phone. “The slowdown was concentrated just in some few markets,” and the research company still expects “a sensible and sustainable increase of deliveries in Europe this year.”

German investor confidence fell a fourth straight month in April, and has declined in May as well. European Central Bank President Mario Draghi primed investors last week for further stimulus in June, saying the 24-member Governing Council is “comfortable” with easing monetary policy next month.

Opel, the German brand of Detroit-based General Motors Co. (GM), and its sister Vauxhall division in the U.K. sold 7.4 percent more cars in Europe last month. The automaker is targeting full-year growth with models such as the Adam city car. GM’s group sales in Europe fell 5.5 percent as the Chevrolet brand, which is being withdrawn from the region, scaled back deliveries.

Opel’s Discounting

Discounting by Opel dealers was the deepest in Germany last month, with cuts averaging 14.8 percent off the recommended price, according to trade publication Autohaus PulsSchlag. Industrywide incentives in Germany averaged 11.7 percent in April, including discounts of 13.9 percent from the French carmakers and 12.8 percent from Turin, Italy-based Fiat SpA. (F)

Fiat’s European sales rose 1.5 percent in April, with the namesake brand’s deliveries increasing 3 percent and demand at the Jeep SUV division surging 52 percent.

‘Incredibly Unrewarding’

Part of Fiat’s strategy shift as it merges with U.S. manufacturer Chrysler Group LLC will be to drop out of volume carmaking in Europe, “an incredibly unrewarding market segment which has historically produced no margins and destroyed capital,” to focus on upscale SUVs, sedans and sports cars, Chief Executive Officer Sergio Marchionne said earlier this month. “I am still negative on Europe.”

Among Asian carmakers, only Tokyo-based Honda Motor Co., with an 8.2 percent drop, and Seoul-based Hyundai Motor Co., with a 4.1 percent contraction, posted sales declines in Europe.

Bayerische Motoren Werke AG (BMW), the world’s biggest maker of luxury cars, sold 0.5 percent more autos in Europe as a 3 percent gain at the namesake brand compensated for an 11 percent drop at the Mini small-car marque, which is updating its lineup.

“The business environment remains volatile and uncertain,” BMW CEO Norbert Reithofer said at the Munich-based manufacturer’s annual shareholder meeting yesterday.

Daimler AG’s Mercedes-Benz division, which ranks third in global premium-vehicle sales after BMW and VW’s Audi, posted a 1.9 percent increase. European demand at Stuttgart, Germany-based Daimler’s Smart city-car unit, which is renewing its two-seaters and adding a four-seat model, fell 15 percent.

(Source: Bloomberg)