Sales boost offers hope for auto sector

6th August 2009, Comments 0 comments

Bonus scheme offered by France and Germany is starting to bring in more sales of cars.

Paris – Rising car sales are offering a glimmer of hope for the depressed international auto sector, but analysts stress that the positive data is largely dependent on temporary government bonus schemes.

The auto sector was one of the first to be hit by the global economic crisis because of a collapse in demand for cars and is being closely watched by economists as an indicator for any signs of economic recovery.

In the United States, Ford Motor Co reported Monday its first increase in sales in almost two years, posting a 2.3 percent increase in total sales in July to 165,279. Retail sales at its core brands – Ford, Lincoln and Mercury – rose nine percent to 118,197 vehicles.

Chrysler Group reported a nine percent drop in total US auto sales in July to 88,900 vehicles – of which 76,693 were retail sales – but said retail sales were up by 52 percent thanks to "cash for clunkers," a government-funded trade-in programme.

General Motors meanwhile posted a 19.4 percent drop in US auto sales in July but celebrated the programme, which helped boost sales for the final week of the month.

The automaker, which emerged from bankruptcy protection on 10 July, said it expects its share of the retail market to come in higher than July 2008 despite a nine percent drop in retail sales to 155,569 vehicles.

France offered an upbeat assessment of its auto market, with the main auto manufacturers' group, the CCFA, reporting a 3.1-percent increase in new car sales in July from the same month last year.

Sales at France's biggest carmaker PSA Peugeot Citroen posted an impressive 11.4-percent rise and Renault sales jumped by 18.5 percent, the data showed.

But Guillaume Mouren, an analyst at market research company Xerfi, warned sales would fall after a government bonus scheme runs out later this year.

"Even if the bonus scheme is phased out gradually, there's still going to be a big fall next year," he said.

 "French people want to take advantage of the highest bonus and put in their orders before 31 December."

Like many major economies, including Germany and the United States, France has implemented a bonus scheme for car buyers to trade in their old models in a drive to boost sales and promote more eco-friendly transport.

Germany, in particular, has seen a boom in car sales this year because of the scheme.

Spain meanwhile is continuing to see a drop in sales year-on-year, although it is less steep than before, the ANFAC manufacturers' association said.

ANFAC said the latest figures, showing a total of 108,222 vehicles were registered in Spain in July, mark a "continuation of the slowdown of the decline" due to "the positive effects of direct aid on the market."

The picture for the world auto industry is still far from rosy however.

European and Japanese carmakers, including Daimler, PSA Peugeot Citroen and Honda, last week reported dismal results because of the economic crisis, although they remained upbeat about the prospects for a recovery this year.

Hopes for the auto sector are focused mainly on a recovery in Western markets and growth in key emerging economies such as China and India. Once-booming markets in Eastern Europe are however still struggling with recession.

Russia's main automaker, Avtovaz, was reported last week to be considering cutting up to a quarter of its 110,000 workforce and the Czech Republic on Monday reported a 10.9-percent contraction in car output so far this year.

AFP / Expatica

0 Comments To This Article