* EU 2012 new car sales reach lowest level since 1995
* Sales fall 8.2 pct in 2012, worst contraction since 1993
* Car sales fall 16.3 in December alone
By Christiaan Hetzner and Helen Massy-Beresford
FRANKFURT/LONDON, Jan 16 Demand for new cars in
recession-bound Europe fell to a 17-year low in 2012, leaving
mass market manufacturers little hope for this year as they try
to cut costly excess factory capacity and aggressive discounting
dents their margins.
Registration data released on Wednesday also showed the
biggest annual drop since a 16.9 percent downturn in 1993,
highlighting the crisis for automakers in Europe. Consumers are
fretting over austerity measures, job security and rising living
costs, and those who want to buy new cars are struggling to
Even Germany's mighty Volkswagen suffered a drop
in sales, according to the figures from the European automotive
industry association ACEA. However, South Korean brands Hyundai
and Kia, which are making an aggressive
push in Europe, proved it is possible to expand sales even
during a grim downturn.
Peter Fuss, senior advisory partner at Ernst & Young's
Global Automotive Center, said an industry practice of
registering new cars before offering them as used vehicles at a
discount was flattering even the dire new sales figures.
"The actual decline is much worse than the statistics would
have us believe as sales figures for the year were artificially
inflated as a result of self-registrations by dealers and
automakers, especially in the region's biggest market, Germany,"
Mass market carmakers are cutting jobs in underused plants
across Europe, with Renault the latest to announce job
losses, following Honda, Ford, PSA Peugeot Citroen
New car registrations fell 8.2 percent to 12.05 million
vehicles in 2012, the lowest level since 1995, ACEA reported.
Losses in all major euro zone economies, combined with two fewer
working days on average, sent European Union registrations
tumbling 16.3 percent last month to 799,407 vehicles, it added.
This marked the worst plunge in 26 straight months - since
The industry tried to satisfy more robust demand for
second-hand cars through the self-registrations.
Nearly 904,500 vehicles, or 29.3 percent of the new car
market, were registered last year either to car manufacturers
themselves or their dealers in Germany, figures from
Frankfurt-based Dataforce and the German Federation for Motor
Trades and Repairs showed.
"Further, to prevent a freefall in sales, automakers and
dealers offered record discounts, which are likely to put a lot
of pressure on their margins," Fuss added.
Even the German economy is suffering from the euro zone
recession. In the final quarter of last year, it shrank more
than at any point in nearly three years, data showed on Tuesday.
Among the worst hit last month were mass-market stalwarts
including U.S. carmakers Ford and General Motors,
where group sales each fell roughly 27 percent. GMT's Chevrolet
brand posted an even weaker month than its ailing sister Opel.
Even Volkswagen, which was performing better than its peers
earlier in the year, saw sales of its core VW brand fall 22
percent. The December plunge at its luxury brand Audi nearly
However, Hyundai and Kia remained a rare bright spot as they
push out models with styling that has proved popular with
buyers, gaining 10.5 percent and 6.8 percent respectively. The
brands have been gaining ground, helped by a European Union Free
Trade Agreement with South Korea, as they build a reputation for
affordable small cars with long warranties.
DARKEST BEFORE THE DAWN?
Britain was also a brighter spot where the 2012 market grew
5.3 percent to a four-year high, helped by self-registrations,
aggressive discounting and a wide range of financing deals
allowing drivers to pay a fixed monthly cost, eliminating the
risk of buying a car outright.
"We haven't seen the levels of discounting we've seen in
2012 for quite some time," said John Leech, KPMG's UK head of
Paul Everitt, chief executive of UK auto industry body SMMT,
said "pent-up demand" also helped British sales as habitual new
car buyers who had stayed out of the market for the past few
years began returning to the showrooms.
However, demand for new cars last year remained down about
15 percent from pre-recession, 2007 levels. The SMMT expects
demand to be broadly stable in 2013 in a "challenging" market.
The European outlook is subdued for this year too. Market
forecaster LMC Automotive recently estimated a 3.1 percent drop
in western European sales to 11.4 million vehicles, an 11
percent drop from the 12.8 million sold in 2011.
Some experts hedged their bets, arguing that the darkest
time might be just before the dawn.
"Maybe, just maybe the next move in car sales could be up.
If unemployment doesn't worsen ... if access to credit doesn't
deteriorate ... if consumers grow no more fearful ... then it's
possible. A recovery in European demand could be the biggest
upset of 2013," Bernstein analyst Max Warburton wrote in a