European car sales down 6.6 percent in 1st half

Associated Press
FILE - In this Wednesday, June 1, 2011 file photo, Thomas Mehlhose works at the assembly line for the Volkswagen Phaeton in Dresden, eastern Germany. The European car industry showed further signs of distress Tuesday, July 16, 2013 as new data revealed car sales were down 6.6 percent for the first half of the year compared with the same period in 2012. (AP Photo/Jens Meyer, File)
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PARIS (AP) — The European car industry showed further signs of distress Tuesday, as new data revealed car sales were down 6.6 percent for the first half of the year compared with the same period in 2012.

The European automakers' association, ACEA, said that there were 6.205 million new car registrations from January to June in the European Union, providing further grim reading for an industry that is struggling amid a deep recession and high unemployment.

The car industry also had its worst June in 17 years, with demand falling 5.6 percent from a year earlier to 1.134 million cars. The figures do not include Malta, for which there was no data, or Croatia, with just joined the EU.

Car registrations fell for 18 months to April, when extra working days created a small bounce. But the slide has since picked up again, with sales in May dropping by 5.9 percent on the same month last year to 1.042 million units, the lowest level for that month since 1993.

The European Union's economy is in recession again, with gross domestic product falling 0.1 percent in the first three months of this year. Unemployment stands at 11 percent. Europe's car industry has long struggled from overcapacity at factories and uncompetitive wages and labor laws, and the region's economic crisis has compounded these problems, as consumers put off big-ticket purchases.

To cope with the dwindling market in Europe, automakers have announced factory closures and put off new car launches in a bid for survival and to return their struggling European operations to profitability.

But Carlos Da Silva, an analyst with IHS Automotive, said the picture might be improving, even amid all the gloom. He noted that when figures for the past few months are adjusted for seasonal impact — such as the different number of working days in a month from one year to the next — the decline isn't as steep as it first appears and seems to be stabilizing.

"This seems to indicate that West European sales have eventually started to bottom out," he said. "Which is, by the way, not the same thing as saying they have started to recover. By any standards, the region remains a dreadful zone for most manufacturers."

One surprising bright spot was Portugal, which, though mired in recession, showed a bump in sales of 2.9 percent for the first half of the year. It could be that after putting off buying new cars for so long, some people are now simply forced to get rid of their wrecks. The market in Britain also seems to be gathering steam, up 10 percent for the year.

But most places clocked deep slides. For January through June, registrations fell 8.1 percent in Germany, 11.2 percent in France and 10.3 percent in Italy. Tiny Cyprus, which agreed to a bailout in March, saw the biggest slide, falling 42.7 percent this year.

Amid the poor performance in the first half, most carmakers saw significant declines in sales. France's PSA Peugeot Citroen was one of the biggest losers, with a 13.3 percent decline; Italian automaker Fiat dropped 10 percent.

But some luxury brands bucked the trend. Sales for Mercedes were up 3.5 percent, while Jaguars' rose 15.5 percent and Land Rovers' 10.2 percent. Honda also pulled away from the pack of everyday cars, posting a gain of 6.4 percent.

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