French and Spanish car markets show recovery signs in September

Mercedes-Benz A-class cars are displayed in a dealership of German car manufacturer Daimler in Paris

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Mercedes-Benz A-class cars are displayed in a dealership of German car manufacturer Daimler in Paris, July 30, 2013. REUTERS/Christian Hartmann

PARIS/FRANKFURT (Reuters) - New car sales in France and Spain rose last month, raising hopes that the worst is over for a western European auto market reeling from slumping demand.

September sales are a good gauge of underlying trends in Europe, given August's results are not seen as indicative of overall demand since many car buyers are on holiday. It is also a crucial month for the UK market.

Paris-based industry group CCFA on Tuesday maintained its full-year forecast of an 8 percent decline for France, Europe's third largest auto market, which implies a slight improvement in the final quarter over the 8.5 percent drop in the first nine months.

Registrations of new cars grew to over 142,000 vehicles in September, it said in a statement, as a 19 percent sales surge for the Renault (PAR:RNO) marque more than offset 6-7 percent declines at French rival PSA's (PAR:UG) Peugeot and Citroen brands.

Sales of Mercedes-Benz brand luxury cars jumped almost 40 percent on pent-up demand after the country's highest administrative court ordered the government to lift its sales ban on the German carmaker. France had barred sales of roughly half of Mercedes cars over parent Daimler's (GER:DAI) refusal to stop using a banned air-conditioning coolant.

Separately, Spain's auto industry group Anfac said on Tuesday that new car sales in the austerity hit country jumped 29 percent to over 45,000 cars last month, helped by government subsidies and one extra working day this year.

"The market last month should not be taken as a reason to celebrate, but could be seen as a sign that we're starting to get some breathing room," said Juan Antonio Sanchez Torres, President of vehicle showroom and sales association Ganvam, in an Anfac statement.

Industry watchers have been waiting to see whether last month would reveal if the 5 percent decline in August was just a blip or could signal further problems to come, after the overall European market crashed to the lowest level for the first eight months of a year since records began in 1990.

September is the second busiest time of the year for UK dealers - the only major western European car market to report marked growth so far this year - with nearly a fifth of the country's annual volume sold in the month.

Auto executives said during last month's Frankfurt motor show that they saw signs the European car market was bottoming out thanks to recent indicators suggesting record high unemployment had stabilised.

The industry consensus is for a lethargic and uneven return to growth next year, as the flow of cheap credit to the private sector remains strained in many parts of southern Europe.

Most new car buyers in Europe finance their purchase via loans or leases, so demand is impacted by the availability of and conditions attached to credit.

September car sales figures from Italy, one of the worst performing major European markets, is due around 1600 GMT (5 p.m. British time).

(Reporting by Dominique Vidalon and Christiaan Hetzner, additional reporting by Paul Day in Madrid, Editing by Natalie Huet and Louise Heavens)

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