Emerging Markets Temper European New-Car Sales Slide

PARIS – August sales of passenger vehicles in the European Union slipped 8.9% to 8.27 million units, bringing the 2012 shortfall to 7.1% after eight months.

Germany, the continent’s economic engine, saw deliveries fall 4.6% in August, trimming its market share 0.6% year-to-date. Among the major markets only U.K. sales were ahead of like-2011 after eight months. But controversy is swirling there over private registration practices that critics say are inflating the sales figures.

Paul Williams, chairman of a dealer group, said in July that “the market is witnessing increased levels of self-registration by U.K. dealers, which is inflating registration data compared to sales levels.” The editor of Glass’s Guide, which tracks vehicle prices, adds the practice could harm sales in the final quarter.

September deliveries in the U.K. are expected to be strong because a new license plate will be available, indicating to a driver’s acquaintances that the car really is new.

In a handful of Eastern European countries – Bulgaria, Slovakia, Czech Republic, Poland, Latvia, Hungary and Estonia – consumers are buying more cars than a year ago. Denmark also is up, by 1%, but the rest of the EU’s markets are behind year-ago sales levels.

Growth in Eastern Europe matches the common perception that emerging markets are the future. Plastic Omnium is the latest auto supplier to announce it will build a factory in Russia, this one to supply three auto makers with plastic fuel tanks.

Deliveries by all the European volume manufacturers except Volkswagen Group continued to suffer in August. PSA Peugeot Citroen was down 13%, Renault 12.9%, Ford 28.9%, General Motors 17.8% and Fiat 18.2%. They lost sales at the low end of the market to Hyundai, up 10.1%, and Kia, up 23.1%, and at the top end to the premium makers.

Remi Cornubert, a partner in the Oliver Wyman consultancy, says a growing disparity in incomes globally is helping the entry-level and premium brands grow at the expense of traditional middle-class cars.

In Europe, the entry-level trend is visible at General Motors, where sales of Korea-built Chevrolet brands were up 7.5% on the year through August, and at Renault, where Dacia improved 16%. Renault’s entry-level cars, sold as Dacias in some markets and Renaults in others, will make up 40% of Renault’s sales in 2015, Cornubert says.

Gains at the high end are visible at Volkswagen. For the year, the group’s sales held steady, down 0.1% from last year, but the Audi brand was up 6.2%.

The big Japanese makers also are behind 2011, but to a lesser degree than the Europeans.

Even deliveries of premium brands have been running behind in Europe so far this year, even though they gained market share. Through August, BMW was down 3.1% and Daimler was off 2.7%.

The surprise champion for growth in the first eight months was Jaguar Land Rover, with sales jumping 35.5%. Demand for the Land Rover Evoque SUV drove August Land Rover deliveries up 73% from like-2011.