European Auto Recovery Gains Pace
January Demand Rebounds in Countries Hit Hardest by Debt Crisis
BERLIN—The recovery of the European auto industry gained pace in January as car makers throughout the 28-nation bloc posted gains and demand rebounded in countries hit hardest by the euro-zone debt crisis.
New car registrations, which mirror sales, rose to 935,640 vehicles in January, up 5.5% from the same month a year earlier, according to the Association of European Automobile Manufacturers, known as ACEA.
The rise in January marks the fifth-consecutive monthly increase in demand after six years of declining sales, but ACEA said it was the second-lowest number of cars sold in the month of January since the group began collecting EU-wide data in 2003.
"Most EU markets posted growth, as did all the major ones, from 7.6% in the U.K. and Spain, to 7.2% in Germany, 3.2% in Italy and 0.5% in France," ACEA said in its monthly release.
Europe's weak economic recovery may also be beginning to unleash pent-up demand in some of the region's hardest-hit economies and benefiting car makers. Car sales rose 33% in Ireland, 32% in Portugal, 15% in Greece, and 7.6% in Spain, some of the countries worst affected by the euro crisis.
Doubts remain about how strong the recovery in car demand will be. With unemployment still high in many countries, some European governments have provided incentives to boost demand for new cars while dealers have been wooing car buyers with discounts and inexpensive financing. The sales data may also be inflated by a high rate of short-term registrations of unsold cars by the dealers themselves.
Allan Rushforth, chief operating officer at Hyundai Motor Europe, said that the January figures showed the industry had left the trough and was on the road to recovery, but he remained skeptical about the turnaround.
"The question is how much of that recovery is organic and how much is the result of actions taken by governments and car makers," he said.
Registrations at Hyundai, which in recent years has been one of the fastest-growing car suppliers in Europe, fell 5.9% to 30,047 cars in January.
Industry analysts remain guarded too about the strength of the upturn.
"Whilst clearly a positive month it was perhaps not as strong as might have been expected and at this point we don't want to get too carried away," auto analysts at ISI Group said, citing an 2.8% decline in registrations on a comparable basis month on month. Fewer discounts and incentives in some markets may have contributed to that decline, ISI said.
Rebates and cheap financing stimulated sales in Germany in January, while a scrapping premium in Spain underpinned sales there, said Ernst & Young analyst Peter Fuss.
In contrast, car sales continued to decline in Austria, Belgium, Cyprus, Estonia and the Netherlands.
Volkswagen AG VOW3.XE -0.67% , Europe's largest car maker by sales, sold 237,538 cars in January, up 8.9% from a year earlier. PSA Group, which makes the Peugot and Citroën brands, sold 109,257 vehicles, up 7.4%. Renault RNO.FR +0.08% group sales jumped 13% to 86,452 cars in January.
Among the major non-European manufacturers, GM car sales fell 5.3% to 64,687 vehicles in January despite a 9.1% rise in sales of GM's Chevrolet brand. Toyota Motor Co sales rose 17% to 44,321 cars.
Mazda Motor Corp. was the fastest-growing car maker in Europe in January, with sales surging 35% to 13,417 vehicles.