Incentives lifted European car sales in June: ACEA

By Helen Massy-Beresford, European Autos Correspondent

PARIS (Reuters) - European car sales, helped by incentives in major markets to scrap old vehicles, rose for the first time in 14 months in June in a further sign the battered industry may be past its low point and lifting the sector.

New car sales rose 2.4 percent year-on-year in June when 1,461,859 vehicles were registered in Europe, where the industry directly employs 2.2 million, industry body ACEA said on Wednesday.

On Tuesday, German luxury carmaker BMW's (BMWG.DE) head of sales and marketing suggested the worst was over for the high-end car sector and the company was ready to increase production in the next six months.

At 0940 GMT, the European car sector .SXAP was up 2.3 percent.

Credit Suisse analyst Stuart Pearson said the "reason why the figures start to look better from here on in, is because it was this time last year that car sales really started to fall off a cliff. You'll start to see some much healthier looking European sales figures but you shouldn't really be deceived.

"I think the pace of underlying decline has probably stabilized. But the increase in sales is purely scrappage related and the question is how that will pan out as these schemes fade," he said.

ACEA noted the "steep downward trend" of sales sparked by the credit crunch and worsening economic climate started in May 2008, and that already in June last year sales were down 7.9 percent compared with June 2007.

Its monthly figures came as bidders prepared to submit detailed offers for a stake in General Motors' GMGMQ.PK German unit Opel, and Porsche rebuffed Volkswagen's merger plan, according to a German newspaper.

SCRAP THE OLD

Scrapping incentive schemes -- whereby governments allocate funds to pay drivers bonuses for trading in old models for newer, less-polluting vehicles -- are now in place in all major European markets and have mostly boosted sales of smaller cars.

Sales in Germany jumped 40.5 percent, Italian sales rose 12.4 percent and French sales were up 7.0 percent. Newer support measures in Britain, which posted a 15.7 percent drop, and Spain -- down 15.9 percent -- cushioned the downturn, ACEA said.

In the first six months of the year, passenger car sales were down 11 percent in Europe, which for ACEA's figures includes the 27 EU member states plus the EFTA (European Free Trade Association) countries, but excludes Cyprus and Malta.

New member states saw a 25.3 percent fall in sales in June, with growth only in the Czech Republic and Slovakia -- up 18 percent and 57.4 percent respectively. In Western Europe, sales rose 4.6 percent in June, ACEA said.

The unwinding of scrappage schemes is a worry for carmakers.

French carmaker Renault's (RENA.PA) chief executive Carlos Ghosn said last week that 2010 would be as hard as 2009 for the industry, and that the end of scrapping schemes could be difficult.