French auto sales struggle, production dives

Workers of the PSA Peugeot Citroen carmaker plant of Aulnay-sous-Bois, a Paris suburb. (AFP/Lionel Bonaventure)

PARIS: Sales of new cars in France rallied slightly in July when French brands did well with new models, but in the first six months of the year output by French carmakers plunged by 20.8 per cent, trade data showed on Thursday.

Overall sales rose by 0.9 per cent to 150,248 in July, the CCFA body representing manufacturers said.

But July this year contained one more business day than the comparable period last year and if this were stripped out, sales fell by 3.5 per cent.

July is an important month for sales since many motorists buy a car before leaving on their summer holidays.

A spokesman for the CCFA said that the July figure marked the first upturn since October 2011.

The French market, in common with many others, was hard hit by the effects of the financial crisis, despite a temporary scheme of government subsidies for people who scrapped an old car to buy a new one.

The CCFA expects the overall French market, which has been falling for months, to shrink by a further 8.0 per cent this year.

In the first seven months of the year, sales fell by 9.7 per cent before adjustment for seasonal and other factors.

In the first six months the fall was 11.3 per cent.

The sector hopes that the worst market conditions are now behind it

French brands account for 55.0 per cent of the French market and overall they did better in July than foreign competitors.

The struggling PSA Peugeot Citroen group, which announced this week it had reduced losses and was on the way to recovery, raised its sales by 0.9 per cent, and Renault which owns the low-cost Dacia brand, raised sales by 4.7 per cent.

An auto analyst at specialist institute Polk, Bertrand Rakoto, said that there was "an undeniable rise of interest in French brands because they had renewed their range."

But he explained that in order to face "ferocious" competition on the still shrinking French and European markets, the French firms were trying to protect their margins even if this was at the cost of some production volume.

Consequently, production of cars and light commercial vehicles by PSA and Renault together fell by 20.8 per cent in the first six months, the CCFA data showed.

The total production figure in terms of vehicles was 758,455.

However, for PSA the fall was 25.1 per cent while for Renault it was 11.3 per cent.

In 2012, their production overall had fallen by 16.4 per cent.

The Polk institute said that after accounting for a Japanese Toyota factory in northern France, and for activities by German Daimler which has a Smart car facility in northeastern France, total output this year would be 1.741 million units but would continue to shrink in the first quarter of next year.

Sales by foreign manufacturers fell by 1.0 per cent in July.

Sales by the German firms Volkswagen and Daimler, and US group Ford were notably weak.

But Fiat of Italy and Toyota raised their sales.

In Spain, still in recession amid attempts to correct public finances, sales jumped by 14.8 per cent in July, boosted by a cash-for-clunkers government subsidy.

But the Spanish market has shrunk sharply, and in the first six months it has contracted by a further 2.1 per cent to 461,382 units.

New car sales in Italy slid by 1.9 per cent in July to 107,514, a slower rate than in previous months, according to transportation ministry data.

For the first seven months of the year sales were down 9.2 per cent, after having plunged 20 per cent last year.