UPDATE 1-Renault leads gains in slow European auto recovery

Tue Dec 17, 2013 5:46am EST

* European car sales rise for third month

* Year-to-date decline smaller than feared

* Renault, Toyota, VW lead advance

By Laurence Frost

PARIS, Dec 16 (Reuters) - Renault, Toyota and Volkswagen led a 0.9 percent November gain in European car sales, according to industry data published on Tuesday, pulling ahead of Fiat, General Motors and Ford in a slowly recovering market.

Registrations in the European Union and European Free Trade Association trading bloc rose to 975,281 from 966,421 a year earlier, their third straight monthly gain, the Association of European Carmakers said.

As the European market nears the end of a sixth consecutive year of decline, industry leaders such as Renault Chief Executive Carlos Ghosn are hopeful the region can return, at least, to modest single-digit growth in 2014.

The gradual turnaround will do little to relieve the pressure of excess production capacity that has continued to weigh on European operations, fueling a profit-sapping price war of unusual ferocity.

The data "confirms what manufacturers and suppliers have indicated during third-quarter earnings - that the European auto market has stabilised", Citi analyst Philip Watkins said.

"Renault was the standout for the second consecutive month," he added in a note to investors.

Volkswagen and Renault posted respective increases of 0.8 percent and 2.6 percent for their namesake mid-market brands, and bigger gains in lower-cost cars that helped group sales to rise 3.2 percent and 8.9 percent.

The German carmaker, Europe's No. 1 by volume, recorded an 18 percent increase at its no-frills Skoda division. Low-cost Renault models, such as the Dacia Duster sport utility vehicle, (SUV) surged 30 percent. Toyota registrations rose 6.9 percent.

BETTER THAN EXPECTED

November's registrations gain pared the region's year-to-date decline to 2.8 percent - a more modest fall than many in the industry had feared earlier in the year.

In March, GM's Opel was braced for a further 10 percent European market contraction and Morgan Stanley cut its outlook to predict a 6 percent slump.

But automakers that lack new models or a low-cost offering are still suffering.

Sales by Italy's Fiat tumbled 5.8 percent across the market of 30 European states as demand for its ageing model line-up fades, leading to an 8 percent contraction so far this year.

Fiat chief Sergio Marchionne has delayed multibillion-euro factory investments for long-promised expansions of the upmarket Maserati and Alfa Romeo brands while pursuing a bitter buyout dispute with its 58.5 percent-owned Chrysler division's minority shareholder.

GM sales dropped 3.8 percent as both main brands fell. The U.S. carmaker is withdrawing the underperforming Chevrolet badge from Europe to focus on reviving mid-market Opel.

Loss-making French carmaker PSA Peugeot Citroen recorded a 1.2 percent drop in registrations despite recent model launches, such as its 2008 mini-SUV.

Ford also retreated 2.9 percent. In a move designed to lift its brand and margins ahead of a coming model offensive, Ford is cutting back on unprofitable sales to rental companies as well as heavily marked-down vehicles sold as nearly new.

The company expects western Europe to return to growth in 2014 after bottoming out this year, Ford of Europe CEO Stephen Odell said last month.

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