Govt green incentives give auto sales boost

Government incentives in Italy and France to buy greener cars propelled sales of Fiat and Renault in the final month of 2007, just enough for the Western European auto market to record its highest level in six years.

Industry data published yesterday showed new car registrations in the region eked out marginal growth of 0.2 percent last year to 14.79 million vehicles, just shy of the 14.82 million recorded in 2001.

It could have been even higher were it not for disastrous sales in Germany, which suffered its worst year since reunification 17 years ago following a painful hike in value-added tax.

"Soaring oil prices, changes in taxes, shrinking credit availability and purchasing power restrained buyers' confidence and the demand for new cars in some of the Western European countries," a statement published by the Brussels-based automotive industry association ACEA said.

A vehicle scrapping incentive boosted Italian sales to a level not seen in over a decade and France nearly matched a five-year high thanks to soaring demand for luxury cars in December ahead of a new system penalizing CO2 emissions.

A healthy auto market is critical for the economy in Europe, where some 2.3 million people are directly employed in the industry that manufactures about 32 percent of the world's cars, according to the ACEA.

By comparison, new car sales in the United States fell nearly 3 percent to 16.14 million vehicles last year, the lowest since 1998, amid ongoing job cuts and market share declines at Detroit's Big Three automakers.

A strong export business helped by the soft yen and a reputation for building quality cars allowed Japanese companies to escape from troubles at home, where 2007 sales fell 7.6 percent to 3.43 million new cars, the worst result in 35 years and the first time that demand had fallen for four consecutive years.

Fatter wallets

Rising wealth standards in Poland, the Czech Republic and new EU member Romania spurred a 14.5 percent gain in registrations in eastern Europe for 2007, according to the ACEA.

"In the new EU member states, where car density is still much lower and many households have been able to afford buying a new car only recently, a steady growth was recorded throughout the year," it said.

Throughout all of Europe, where registrations rose 1.1 percent to 15.96 million vehicles last year, Fiat posted the strongest growth among major carmakers at 7.1 percent.

A late spurt in demand helped by the second-half relaunch of its Twingo and Laguna models could not save Renault from a 7.5 percent drop in sales of its own brand for the full year but the company enjoyed a 25 percent surge in sales of its no-frills Logan.

Popular Romanian brand

More impressively, the popular Romanian-built low-cost Dacia was the fastest growing brand in the discriminating Western European market, where sales doubled for the full year and tripled in December alone.

Europe's two largest carmakers, Volkswagen and Peugeot Citroen, had to absorb declines in their shares of the overall market due to flagging demand for their respective core brands.

While premium nameplates including Ford's Land Rover continued to at least maintain or expand their market shares last year, the US carmaker's other luxury marque up for sale, Jaguar, had to watch its sales plummet 19 percent ahead of its likely disposal to Tata Motor of India.

A chronic money-loser, Jaguar was even overtaken in Europe by Toyota's premium brand Lexus for the first time.

Agencies

(China Daily 01/17/2008 page17)