* Sales fell 10.3 pct in March - industry body ACEA
* Peugeot, Toyota led March sales declines
* Retail incentives rose in Jan-Feb - data
By Laurence Frost
PARIS, April 17 PSA Peugeot Citroen
and Toyota led European car sales 10.3 percent lower in
March, as an unrelenting market contraction spreads to the
region's more prosperous north, unnerving automakers.
Registrations dropped to 1.35 million cars last month from
1.5 million a year earlier, the Association of European
Carmakers said on Wednesday.
That completed a near 10 percent decline for the first
quarter that has prompted industry bosses to trim their 2013
sales outlooks and prepare the ground for possible profit
Defying earlier industry predictions of a second-half
rebound, European car sales are headed for a sixth straight
annual decline to a two-decade low, threatening to undermine the
best-laid turnaround plans and survival strategies.
While France's Peugeot was among March's biggest casualties,
with a further 16.3 percent sales slump it can ill afford,
European No. 1 Volkswagen AG posted a 15 percent
year-on-year decline for its namesake brand as the German market
shrank even more sharply.
Domestic sales are "still a critical driver of German
(carmaker) earnings and the current trend is quite disturbing",
Bernstein analyst Max Warburton said in a note to clients this
"The risk is that Europe remains structurally very weak for
It is a worrying prospect, and not just for Peugeot - which
is cutting 8,000 jobs and a domestic plant to stay afloat. Chief
Executive Philippe Varin says the outlook has worsened since the
company forecast a European market decline this year of between
3 and 5 percent.
Ford Motor Co, also scrapping European plants and
thousands of jobs, lost more ground as its sales tumbled 15.9
percent in March, eroding its quarterly market share to 7.3
percent from 8.2 percent.
Ford emphasized an increase in consumer market share as it
reins in loss-making fleet sales to businesses, but said the
euro zone's worsening conditions and unemployment were a serious
"There was a lot of hope that the second half would start to
see some gradual improvement," Ford of Europe President Stephen
Odell told Reuters Insider TV on Wednesday.
"But with unemployment at 12 million in the euro area, it
doesn't feel like we're going to see that just for a while."
Asked whether Ford was considering more cutbacks, Odell said
the U.S. carmaker had "nothing new to announce" at this stage.
Daimler AG has also cautioned it may have to trim
profit expectations, even after its Mercedes-Benz cars have
gained on BMW and VW's Audi so far this year.
Mercedes sales bucked the market decline with a 0.8 percent
monthly gain, while the BMW brand fell 4.5 percent and Audi
dropped 8.6 percent.
Fiat SpA also put up resistance with a modest 1.2
percent slide in group sales. Chief Executive Sergio Marchionne
has warned that its loss-making European operations, may be
further weakened by a drawn-out slump.
Fiat and Peugeot have been among the carmakers most exposed
to a demand collapse that began in recession-hit southern Europe
and is now gaining a firmer hold in Germany and other countries
in the region's more prosperous north.
Toyota's 16.6 percent registrations decline in March
compared with a year ago was worsened by a bigger drop in sales
of its upmarket Lexus models.
With no end to the decline in sight, cut-throat price
competition can only toughen, piling up more losses for
automakers in the region.
Average retail sales incentives in the top five markets -
Germany, Britain, France, Italy and Spain - rose 13 percent to
almost 2,400 euros ($3,200) per vehicle among volume automakers
in January-February, according to industry data seen by Reuters.
South Korea's Hyundai Motor Co, among the
biggest mass-market gainers last year, sounded a cautionary note
even after lifting its combined market share with affiliate Kia
Motors Corp by another half-point to 6.2 percent in
the first quarter.
Hyundai is sticking to a more modest 2013 goal of defending
its existing share of European sales, the brand's regional boss,
Allan Rushforth, said in a statement.