European Auto Sales Rebound, but With an Asterisk

New passenger car registrations in the 27-nation European Union rose 1.7 percent in April from a year earlier, the first increase since September 2011, the European Automobile Manufacturers’ Association reported from Brussels.

But the association pegged that improvement mainly to the fact that European countries had two more business days, on average, this April than last.

Cara McLaughlin, a spokeswoman for the automakers’ association, said that was because the Easter holiday fell in March this year, instead of in April as it did in 2012. She also emphasized that, even with the extra days, the year-on-year comparison was underwhelming, as E.U. car sales in April 2012 were the worst on record for that month.

“We cannot talk about the market picking up at this stage,” she said.

The overall trend in car sales remains a dismal one: April sales, at just over one million units, were still the third-worst ever recorded for that month since the association started compiling the data in 1990.

Many European households remain reluctant to spend on big-ticket items in a grinding recession and a precarious labor market. Unemployment in the 17-nation euro zone stands at 12.1 percent. Many Europeans see cars as a lifestyle option rather than a necessity.

More ominous for the car industry, a major generational shift appears to be under way, with younger Europeans, like their American counterparts, far less interested in car ownership than their parents and grandparents were.

One-third of the way through this year, the report showed, new car sales were down 7.1 percent from the first four months of 2012. Last year was particularly bad, as annual sales fell to just over 12 million units, the fewest since 1995.

For all of that, though, investors on Friday seemed to embrace the headline number as a sign that the auto market might be reaching its nadir.

Shares of PSA Peugeot Citroën jumped 10.1 percent in Paris on Friday, while Renault closed 3.6 percent higher. In Frankfurt, Volkswagen gained 3.7 percent, and Daimler rose 3.9 percent.

Michael Tyndall, an auto analyst at Barclays Capital in London, said that while it was understandable that people were grasping for good news, the weakness in Europe was not over yet.

He said he had previously predicted a 4 percent drop in European auto sales this year. But with the French market declining at a 10 percent annual rate and Italy faring even worse, at 12 percent, his earlier forecast might prove to be too optimistic.

Mr. Tyndall predicted, though, that the market would hit bottom before the end of the year, and that it would manage growth of just over 1 percent in 2014.

Replacement demand, he noted, might remain insufficient to bolster the market for some time, given that the European fleet is relatively young — about 8.5 years, on average, compared with 11 years in the United States.

Over the longer term, Mr. Tyndall said, the E.U. market, which has declined every year since peaking at 16 million vehicles in 2007, would probably find its eventual equilibrium at around 14 million units.

The latest data show Germany’s auto market, the largest in Europe, growing 3.8 percent in April, while Spain’s expanded 10.8 percent. The market in Britain, Europe’s second-largest, grew 14.8 percent. But the third-largest market, France, continued its slump, shrinking an additional 5.3 percent, while Italy’s declined 10.8 percent.

The four-month trend is more revealing, showing that, among major markets, only Britain grew, with car sales up 8.9 percent. New car sales in Germany are down 8.5 percent in that period.

Sascha Gommel, an auto analyst at Commerzbank in Frankfurt, said he believed the market “is bottoming out at the moment.”

But even so, a return to precrisis sales “is a very long way down the road,” he said. “We wouldn’t be surprised if the market never gets back to those levels.”

Deal to end Peugeot strike

Workers at a PSA Peugeot Citroën factory have agreed to end a four-month strike protesting its planned closure, the C.G.T. union and the carmaker said Friday, Reuters reported from Paris.

Striking employees will return to work this coming week, said Jean-Pierre Mercier, who represents the C.G.T. union at the Aulnay-sous-Bois plant near Paris. He said Peugeot had agreed to drop disciplinary action against strikers and to make pay concessions. The company is cutting 8,000 jobs in France, and the Aulnay plant is to close next year.

Article source: http://www.nytimes.com/2013/05/18/business/global/european-auto-sales-rebound-but-with-an-asterisk.html?partner=rss&emc=rss