Friday, November 14, 2008

European Car Sales Fall 15% as Credit Crisis Deepens

by Andreas Cremer and Chris Reiter

Nov. 14 (Bloomberg) -- European car sales plunged almost 15 percent in October, the sixth consecutive monthly decline, as credit-market turmoil and an economic slowdown hurt demand.

Registrations dropped to 1.13 million vehicles last month from 1.33 million a year earlier, the Brussels-based European Automobile Manufacturers' Association said today in a statement. Sales for the first 10 months fell 5.4 percent to 12.8 million vehicles, accelerating from a 4.4 percent contraction through September.

General Motors Corp. and Toyota Motor Corp. were hurt the most as the European economy battles with recession. Gross domestic product in the 15-nation euro region will shrink for three consecutive quarters this year, the European Commission said Nov. 3, lowering its full-year forecast to 1.2 percent growth from 1.3 percent.

``This is one of the toughest markets I've ever seen,'' said Peter Cornelis, chief executive officer of privately held Kroymans Corp., which owns more than 50 dealerships that sell makes including Ford, GM's Opel and Fiat SpA's Alfa Romeo in Germany, the Netherlands and Belgium. ``One of the big issues at the moment is credit. All the banks are getting more critical. It's extremely difficult.''

The Hilversum, Netherlands-based company is working harder to get customers into showrooms, where traffic is less than half what it was a year ago. Kroymans, which also imports Cadillac and Hummer cars for GM, may reduce the number of dealerships if the slump persists, Cornelis said.

Aid for Automakers

Declining car markets and prospects of limits on carbon- dioxide emissions have caused European automakers to call for 40 billion euros ($51 billion) in low-interest loans. Any EU aid would follow $25 billion in cheap loans that U.S. rivals including GM and Ford Motor Co. are set to receive.

Industrywide car sales in western Europe, including the 15 countries that were members of the EU before May 2004 plus Iceland, Norway and Switzerland, slid 16 percent in October to 1.03 million vehicles, led by drops of 86 percent in Iceland and 55 percent in Ireland.

``Nobody is buying cars at the moment,'' said Georg Stuerzer, a Munich-based automotive analyst at UniCredit. ``The malaise is spreading across Europe and a recovery is not in sight.''

Deliveries in the 10 eastern European nations that have joined the EU since 2004 declined 3.2 percent to 99,076 units. By contrast, sales in those countries posted a 7.8 percent increase in September. The association's figures don't include sales in Russia.

`Suffering'

``Carmakers are suffering big-time; the situation could barely be worse,'' said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Gelsenkirchen in Germany, before ACEA released its figures.

GM's sales in Europe fell 25 percent to 94,479 vehicles, with the Saab brand reporting a 28 percent plunge. The Detroit- based carmaker said Nov. 7 it may run short of cash by the end of the year unless the market improves or it raises more capital.

Registrations in Europe by Toyota slumped 24 percent to 54,612 cars. Asia's largest carmaker, leading GM in global auto sales this year, posted a 69 percent plunge in quarterly net income on Nov. 6. Deliveries of its Lexus brand fell 32 percent.

European deliveries by Renault SA, France's second-biggest carmaker, fell 19 percent, while sales by Stuttgart, Germany- based Daimler AG, the world's second-biggest maker of luxury cars, dropped 17 percent, the association said.

Volkswagen AG, Europe's biggest carmaker, posted a 7.6 percent drop in October. Its Audi luxury brand's deliveries rose 3.3 percent.

To contact the reporter on this story: Andreas Cremer in Berlin atacremer@bloomberg.netChris Reiter in Berlin atcreiter2@bloomberg.net

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