| PARIS/TURIN, July 2
PARIS/TURIN, July 2 French, Italian and Spanish
car sales tumbled in June, rounding off a gloomy first half for
Europe's auto industry where even the German market may not
escape the effects of grim economic conditions.
Already struggling automakers such as PSA Peugeot Citroen
and Fiat suffered as southern European car
markets plumbed new lows, according to data published on Monday,
a day before German registrations are expected to come in
Industry executives are having to tone down recovery hopes
as the crisis deepens, making tentative restructuring moves by
Peugeot and General Motors look inadequate and raising
pressure on those yet to act.
"We're standing in doo-doo," Fiat Chief Executive Sergio
Marchionne told reporters in Turin on Sunday. "Whether you're in
an inch of it or three inches doesn't matter, the stench is
In Germany, where deliveries turned negative in May, rising
discounts and automaker self-registrations - selling new cars as
used - suggest Europe's biggest market can no longer be relied
upon to soften the slump.
"The auto sector crisis is on a European tour," London-based
Credit Suisse analyst Erich Hauser said. "Germany is starting to
feel the ripple effects."
Italian registrations plunged 24 percent to record the worst
June since 1979, manufacturers' association UNRAE said, while
French sales slid further toward an expected 10 percent
The Spanish car market also shrank 12 percent as frantic
discounting failed to avert a 24th straight monthly fall,
according to the country's ANFAC grouping.
"People aren't taking advantage of some of the best offers
on record," the association's economist Aranzazu Mur said.
According to an MSI study commissioned by Spanish dealers,
full-year auto registrations are likely to fall to a
quarter-century low of 720,000 from more than 1.6 million in
Ford sales halved in Italy, where GM's Opel deliveries
fell 44 percent and Fiat's dropped by a quarter, in line with
the market. In Spain, the two U.S. automakers posted declines
close to 20 percent, while Renault fell 23 percent and
Citroen 13 percent.
For the first half, registrations were down 14 percent in
France, 20 percent in Italy and 8.2 percent in Spain.
The euro-zone debt crisis and sagging consumer demand are
weighing on earnings at mid-market automakers that had already
struggled, or failed, to stay profitable in Europe last year.
Ford has blamed Europe for overseas losses expected to have
tripled in the second quarter from the $190 million recorded in
Fiat and Peugeot, heavily exposed to the worst affected
markets, are also expected to report significant first-half
automotive losses in the region later this month.
Only two European car factories are so far earmarked for
eventual closure - Peugeot's Aulnay plant near Paris and GM's
Opel facility in Bochum, Germany.
Even their immediate decommissioning would barely dent a 7
million-vehicle gap between the region's production capacity and
projected output for the next three years, according to an
AlixPartners study published last week.
"European production is going to have to adapt to demand in
the end," the consulting firm's managing director Laurent
Petizon said. "Only then will automakers return to
Ford's French car registrations dropped 21 percent last
month, while Fiat's fell 17 percent and Paris-based Peugeot
recorded a 9.5 percent combined sales decline for its two brands
The French market was down just 0.9 percent overall, thanks
to an additional day of sales compared with June 2011 and
purchases carried over from May - when business was disrupted by
a presidential election and public holidays falling on weekdays.
Sales excluding the extra day fell 5.6 percent, France's
CCFA industry association said, predicting a full-year market
performance "near the bottom end" of its previously forecast
8-10 percent decline.
German incentives are near record highs as the euro zone's
persistent debt crisis spooks consumers, according to a monthly
index published by the University of Duisberg-Essen's Centre for
In a rare move by a German premium brand, Daimler's
Mercedes plans to offer launch incentives on its new
A-Class subcompact, according to an Automobilwoche report.
"May's decline may have marked the turning point for the
German market," said Martin Benecke, a Frankfurt-based analyst
with IHS Automotive, adding that Fiat and Peugeot were leading
the price offensive.
"We're braced for weaker business in the second half," he