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European May car sales drop on fuel, credit woes

Reuters - Saturday, June 14

For details see (Additional reporting by Gilles Castonguay in Milan, editing by Will Waterman and Jason Neely) - PARIS, June 13 - European new car sales fell 7.8 percent in May due to higher fuel prices and one fewer working day, the ACEA European carmakers' association said on Friday, while others cited tight credit and saw more problems in June.

Sales were also down in eastern Europe, where makers had previously found some relief from sluggish western European markets.

May's figures dragged the cumulative five-month figures for Europe into the red, too, trailing 0.7 percent on the year-earlier figures, with demand crimped by what ACEA described as "massive" fuel price rises.

However, Gian Primo Quagliano, the head of Italy's Promotor auto industry think tank, said it wasn't so much the fuel price increase, but the growing difficulty in obtaining car loans that was standing in the way of sales.

While fuel prices were discouraging driving, it was credit that was deterring buyers, he said.

An industry source said protests by truckers against high fuel prices, with blockades at borders, were affecting car deliveries, and that would have an impact on June registrations.

Goldman Sachs on Friday reduced its overall investment view on the automobile sector to "neutral" from "attractive".

"We believe that the auto sector will trade within a `fat and flat' range," the banks' analysts said in a note to clients.

"We adjust estimates to reflect a more protracted slowdown in global car sales. We also incorporate significant increases in raw material costs and current foreign exchange rates in our 2009 estimates," they said.

The DJ Stoxx Automotive index was down 0.7 percent at 1113 GMT, with a 2.23 pct drop for BMW and a 2.4 percent rise for PSA Peugeot Citroen.

A total of 1,334,081 cars were registered in Europe in May.

In western Europe sales fell 8 percent in May and 1.5 percent over the first five months.

In new EU member states, sales fell 4.2 percent in May but over the first five months were up 9.8 percent.

VOLKSWAGEN KEEPS LEAD

Market leader Volkswagen's sales fell 8.1 percent in Europe in May, while Japan's Toyota Motor suffered a 21.6 percent drop in the month.

Nissan Motor's sales rose 8.4 percent in May.

Volkswagen's market share slipped to 20.2 percent from 20.3 percent and PSA's to 13.1 percent from 13.2 percent.

The Renault group posted a 5.7 percent decline in May sales in Europe, with the Dacia brand tumbling 35.8 percent due to a Romanian factory strike over higher wages.

The automaker said its worldwide vehicle sales in May rose 1.1 percent, including small commercial vehicles.

BMW sales were down 4.4 percent in May, and Daimler's fell 13.2 percent.

FRANCE BRIGHT SPOT

France was the only major market to post growth both in its monthly result, up 7 percent in May, and for the five months, up 5.2 percent. This was due to a number of new car launches by the French makers, and the impact of taxes boosting sales of smaller cars.

The number of new registrations in Germany was 6 percent lower than in May 2007, but ACEA said the market was on a stable path.

Germany's cumulative results for the first five months were up 4.2 percent from the same period last year.

The Spanish and the Italian markets fell sharply in May, down 24.3 percent and 17.6 percent, respectively.

Demand for new cars in the UK fell by 3.5 percent in May, after two months of notable growth.

The UK's January-to-May results were down 0.6 percent.

For details see (Additional reporting by Gilles Castonguay in Milan, editing by Will Waterman and Jason Neely)

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