French carmakers see strong year-end

PARIS (Reuters) - French carmakers expect strong sales in the final months of 2009 as drivers flock to take advantage of government scrapping schemes before year-end, contributing to uncertainty about 2010, executives told the Reuters Auto Summit.

Patrick Pelata, chief operating officer of Renault (RENA.PA), said on Monday that its good orderbook meant it was optimistic about the next few months, and probably on the first quarter of 2010. After that there were "big question marks," he said.

Peugeot (PEUP.PA) is expecting a "rather strong finish" to 2009, deputy managing director Nicolas Wertans told the summit, which is taking place at Reuters offices in Paris and Detroit from November 2 to 5.

By 1400 GMT, Renault shares were down 0.33 percent at 30.50 euros, while PSA Peugeot Citroen shares rose 3.17 percent to 22.95 euros, against a DJ Stoxx European Autos Index .SXAP up 0.04 percent.

Pelata said he saw the broader market for new passenger vehicles, hit by a collapse in demand caused by the global recession, continuing to decline next year despite a better end to 2009.

"Our thoughts about the market next year in Europe is, let's say, minus 8 to minus 10 percent against 2009," he said.

Pelata promised additional cost cuts to fight the sales decline, on top of Renault's expected 17 to 18 percent reduction in fixed costs between 2007 and the end of this year.

He said the cuts would affect management layers and would simplify the company structure.

Peugeot's Wertans said he expected the overall European market to reach around 14.5 million units next year, compared with 15.5 million to 16.0 million in 2009, as the early signs of economic recovery would offset the carmakers' "payback period" after government incentives to trade in old cars fade or stop altogether.

His outlook corresponds to a decline of about 8 percent.

The scrapping scheme in Germany, Europe's largest car market, has already ended, and while Peugeot does not see a "boom" in France in the last few months of the year, it should have strong sales there, he said.

French car sales rose 20.1 percent in October, carmakers association CCFA said on Monday.

"There will be probably a payback period next year, especially in some big markets like Germany, but it will be slightly less strong than what we would have feared a few months ago, because in the meantime the economy is slightly recovering," Wertans told the summit.

CHINESE AMBITION

Peugeot has big plans for China, which is "saving the automotive world this year," Wertans said.

Peugeot is the larger of the two brands which makes up France's biggest carmaker PSA Peugeot Citroen, the No.2 in Europe behind Volkswagen AG (VOWG.DE).

The group as a whole is aiming for Chinese market share of around 10 percent versus a current level of roughly 3.5 percent for the two brands.

"We don't have much time, because all car manufacturers are planning the same," Wertans said.

Peugeot will next year unveil a mid-sized sedan aimed at the Chinese market, Wertans said.

"We're too small in China," he added.

PSA Peugeot Citroen said last month that third-quarter sales fell 7.7 percent to 11.782 billion euros, a smaller decline than in previous quarters as it boosted its market share in Europe, where government incentive schemes boosted car sales.

Renault's third quarter sales fell less sharply than in previous quarters, and it said it would increase fourth quarter production.

The company has benefited from scrapping incentive schemes -- in which drivers are paid to trade in old cars for new models -- introduced by governments in major markets to help carmakers survive the crisis.

Commenting on Renault's 2012 target for the mass production of electric vehicles, Pelata said everything was going "completely" according to plan.

Peugeot plans to launch the iOn electric car, based on its partner Mitsubishi Motors Corp's (7211.T) iMiev, in late 2010 in Europe.

"We are very confident iOn will meet its expectations in terms of launch date," Wertans said, adding "We are confident this product will hit the market and be successful not only with individual customers but also business to business customers."

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(Additional Reporting by Matthias Blamont and Gilles Guillaume; editing by Marcel Michelson and Karen Foster)