French Auto Makers Suffer Sales Declines at Home

PARIS – Renault SA and PSA Peugeot Citroen both lost market share in Western Europe and increased sales in the emerging markets where they operate, but only the Citroen brand scored a gain globally during the first six months of 2006.

At Renault, which has no new models this year, the 10.6% sales rise outside Europe did not compensate for a 7.6% decline in its home markets, and its total sales of 1,315,000 vehicles marks a 3.2% drop from like-2005.

The auto maker blames the falloff on the hole in its product cycle and a deliberate move away from “certain volumes that are insufficiently profitable, such as short-term rentals, notably because of the deterioration of the market for used cars.”

Outside Europe, Renault-brand sales were up 13.3%, Dacia grew 10.7% and Renault Samsung rose 2.1%.

Renault is the No.2 brand in Europe, behind Volkswagen, and the No.2 auto maker in France, behind PSA.

The Peugeot brand suffered a first-half net loss of 2.6% on a volume of 1,001,000 vehicles. The drop is being blamed mainly on a decline in Iran, where complete-knocked-down deliveries totaled only 114,000 units, compared with 156,000 a year earlier.

However, for the second half, General Manager Frederic Saint-Geours is confident of a rebound. The new Peugeot 207, on the market barely a month, is expected to make a bigger impact in the second half. It has accumulated 80,000 orders already, Saint-Geours says.

New Peugeot 207 expected to make bigger impact in second half.

Gains in other emerging markets in the first half nearly made up for the shortfall in Iran. Sales were up 113% in China, 19% in South America’s Mercosur region and 40% in Central Europe.

Saint-Geours says a 20% decline in SUV sales in France to about 15,000 units will have no effect on Peugeot’s plans to introduce a Mitsubishi Motors Corp.-built model early next year.

“Our sport/utility has an excellent motor, and it is very good looking,” he says. “We are not worried.”

Citroen deliveries were down 5.7% in France and 2% in Western Europe, but large gains in the new markets gave the brand 763,000 sales in the first half, up 5% worldwide. Sales outpaced market growth in Brazil, Argentina, Japan, Russia, Central Europe and Australia.

But Citroen’s 12% rise in China pales next to the market’s overall growth of 47%.

General Manager Claude Satinet says even though PSA is doubling capacity of its plant in China, it is not enough to keep up with a market expanding “at a frightening speed. We are short by tens of thousands of (units of) capacity, if we want to keep 6%-8% market share.”

Citroen has introduced the C-Triomphe, a sedan version of the C4, in China, where it quickly has amassed 10,000 orders. But the plant is capacity constrained and there are no plans to export the car to other sedan-oriented markets.

Likewise, the new C6, introduced in May in France and Germany, is running behind its intended ramp-up speed. Production is only 40 to 50 units per day, well short of the goal of 100.

Satinet doesn’t detail the production problem but says it is not a quality issue.