European car sales rose a 12th consecutive month as compact models from Ford Motor Co. (F) and Volkswagen AG (VOW) and price cuts by automakers led to the longest stretch of growth on record.
Registrations increased 1.8 percent in August to 701,118 vehicles from 688,464 a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. Sales in the eight months through August jumped 5.8 percent to 8.64 million cars.
Demand for cars in Europe is reviving from a two-decade low last year that stemmed from a sovereign-debt crisis and recession in the countries sharing the euro. The VW Polo and Ford’s competing Fiesta helped propel sales jumps last month exceeding 14 percent for those brands. Manufacturers tried to win buyers with discounts that Barclays Plc estimated averaged 20 percent in Germany and 18 percent in France.
“A slowdown in year-on-year industry growth during the third quarter is a consequence of a slight market recovery in the second half of 2013,” Allan Rushforth, head of European operations for Seoul-based Hyundai Motor Co., said in an e-mail before the ACEA released figures. “Where there is still growth for the industry, it is driven by heavy incentive spending.”
The ACEA compiles figures from the 28 European Union countries, excluding Malta, as well as from Switzerland, Norway and Iceland. The string of gains was the longest since the ACEA began compiling sales figures in 1990, Economics and Statistics Director Quynh-Nhu Huynh said in an e-mail. Until now, the longest growth period was the 10 months from June 2009 through March 2010.
Among the five largest European car markets, registrations rose 9.4 percent in the U.K. and 14 percent in Spain. Sales declined in Germany, Europe’s biggest economy, as well as in France and Italy.
“Barring any new international crisis, we’ll see a progressive recovery up until 2020, though we don’t forecast a return to 2007 levels by then,” Francois Jaumain, a partner at consulting company PwC, said in an interview before the ACEA released figures. With vehicle ages averaging 8.2 years, “there’s a point when customers will need to change their cars.”
European demand at Dearborn, Michigan-based Ford, the fourth-biggest car seller in the region, jumped 15 percent. The company raised production of the Fiesta compact in January to match sales growth, and it pledged in June to build the model’s next version at the current plant in Cologne, Germany, after reaching a cost-saving agreement with unions.
Volkswagen, Europe’s biggest carmaker, sold 9.3 percent more autos in the region, with the namesake VW brand boosting deliveries 14 percent, the Czech division Skoda posting a 21 percent increase and the Spanish marque Seat reporting a 5 percent gain.
Ford and VW were among carmakers widening discounts in August from July in markets such as Germany, the U.K. and France, according to figures compiled by Kristina Church and Michael Tyndall, analysts at Barclays.
“The recovery has basically been in terms of the volume coming back, but the price level has not come back yet,” Roelant de Waard, head of sales and marketing at Ford’s European division, said in an interview on Sept. 15. “So it’s effectively as competitive as it was.”
PSA Peugeot Citroen (UG), the Paris-based company that’s the second-biggest carmaker in the region, sold 1.6 percent more autos in Europe last month, boosted by the 308 hatchback that won the Car of the Year title at the 2014 Geneva motor show. The Opel and Vauxhall sister brands of Detroit-based General Motors Co. (GM) posted a 7.5 percent gain as demand increased for the Mokka compact sport-utility vehicle and Corsa small car.
Among Japanese and South Korean carmakers reporting European sales growth, demand at Mitsubishi Motors Corp. rose the most in August, with a 49 percent surge. Hyundai’s sales increased 1.2 percent. European registrations at Toyota Motor Corp. (7203) fell 8.4 percent.
Jaguar Land Rover, the U.K. premium division of Indian carmaker Tata Motors Ltd. (TTMT), sold 19 percent more vehicles in Europe, the only large luxury-auto producer to report growth in demand last month. Sales fell 2 percent at Bayerische Motoren Werke AG’s main brand, 3.9 percent at Daimler AG’s Mercedes-Benz and 7.6 percent at Volkswagen’s Audi.