13/06/2003 12:18
June 13 (Bloomberg) -- Volkswagen AG, Europe's biggest carmaker, and Fiat SpA led a 5.2 percent decline in Western Europe's car market last month to the lowest May figure in five years as slowing economies in the region curbed demand.
Sales fell to 1.22 million vehicles from 1.28 million cars a year ago, the Brussels-based European Automobile Manufacturers Association said in a faxed statement. Five-month sales fell 3.8 percent. Demand last month for European and U.S. carmakers' vehicles fell while sales of Japanese and South Korean cars grew.
The economies of the 12 countries sharing the euro didn't grow in the first quarter and may fail to do so over the next six months as well, the European statistics office said last week. Consumer confidence in Europe fell in May from April. Orders to factories in countries using the euro fell to the lowest in 18 months, the May survey of purchasing managers showed.
``Europeans' purchasing power is falling, so they are being very careful about what they buy,'' said Bruno Catoire, who manages the equivalent of $115 million in European stocks at Cholet-Dupont Gestion in Paris, including shares in Porsche AG. ``I don't think 2003 is going to be a great one for carmakers.''
The drop in the European car market stems from weak economic growth and ``the aftermath of the Iraq crisis,'' the carmakers association said.
``I would think that any effect from the Gulf war would have been washed out by the end of May,'' said Keith Hayes, an analyst at Goldman Sachs in London.
Carmakers' Forecasts
``I'm surprised that the numbers are falling at this rate,'' Hayes said. ``It's a little worrying. As the numbers go down, we'll have to see if carmakers become more aggressive in their pricing, like they have in the U.S., in a brutal market.''
European automakers have said declines in their biggest markets may hurt earnings.
Volkswagen Chief Executive Officer Bernd Pischetsrieder said yesterday that ``significant'' cost reductions are needed as he doesn't expect economies in Western Europe, the U.S. or South America to improve in the ``short term.'' Carl-Peter Forster, CEO of General Motors Corp.'s German unit Adam Opel AG, yesterday said he can't reaffirm a target of becoming profitable next year.
Turin, Italy-based Fiat's European sales last month fell 16 percent to 88,422 cars. Demand for Volkswagen vehicles dropped 5.8 percent to 227,818 units as Volkswagen-brand sales fell 11 percent while sales of Volkswagen's Audi-brand vehicles rose 4.2 percent.
Wolfsburg, Germany-based Volkswagen will release a new version of the Golf compact car in September. The company has said it expects the car to be the top-selling model in Europe in 2004.
BMW's Decline
Bayerische Motoren Werke AG's total sales fell 9.9 percent to 51,037 vehicles, led by a 14 percent drop in the BMW brand. The Munich-based carmaker's Mini-brand sales rose 15 percent from a year ago to 8,677 cars.
Renault SA sales fell 8.4 percent to 127,334 cars. The Boulogne-Billancourt, France-based carmaker is hoping its new Megane Scenic minivan, which was introduced this week in France, will turn around its sales in the second half of the year.
Sales of General Motors, the world's biggest carmaker, fell 4.7 percent in Western Europe to 122,398 vehicles. Demand at Ford Motor Co., the world's second-biggest carmaker, fell 5.8 percent to 135,019 units.
Mazda Motor Co. led Japanese carmakers' gains with a 45 percent increase to 17,603 vehicles as customers bought its Mazda6 mid-sized sedan, introduced in Europe late last year, and the Mazda2 subcompact model. Japanese brands' combined sales rose 0.5 percent to 149,729 vehicles.
Sales of Kia Motors Corp. of South Korea rose 47 percent to 10,441 vehicles. Total Korean-brand sales in Western Europe rose 9.2 percent to 38,293 units.
``The rise in the euro helps the Japanese a lot,'' Catoire said. It allows them to keep prices low on their vehicles and still make money since many of their costs are in yen and their accounting is in that currency.
Mazda, for example, sells a 75 horsepower version of the Mazda2 for 11,500 euros, compared with the 12,200 list price for PSA Peugeot Citroen's C3 subcompact with the same output.
The euro has appreciated by 11 percent against the yen this year.
Sales fell to 1.22 million vehicles from 1.28 million cars a year ago, the Brussels-based European Automobile Manufacturers Association said in a faxed statement. Five-month sales fell 3.8 percent. Demand last month for European and U.S. carmakers' vehicles fell while sales of Japanese and South Korean cars grew.
The economies of the 12 countries sharing the euro didn't grow in the first quarter and may fail to do so over the next six months as well, the European statistics office said last week. Consumer confidence in Europe fell in May from April. Orders to factories in countries using the euro fell to the lowest in 18 months, the May survey of purchasing managers showed.
``Europeans' purchasing power is falling, so they are being very careful about what they buy,'' said Bruno Catoire, who manages the equivalent of $115 million in European stocks at Cholet-Dupont Gestion in Paris, including shares in Porsche AG. ``I don't think 2003 is going to be a great one for carmakers.''
The drop in the European car market stems from weak economic growth and ``the aftermath of the Iraq crisis,'' the carmakers association said.
``I would think that any effect from the Gulf war would have been washed out by the end of May,'' said Keith Hayes, an analyst at Goldman Sachs in London.
Carmakers' Forecasts
``I'm surprised that the numbers are falling at this rate,'' Hayes said. ``It's a little worrying. As the numbers go down, we'll have to see if carmakers become more aggressive in their pricing, like they have in the U.S., in a brutal market.''
European automakers have said declines in their biggest markets may hurt earnings.
Volkswagen Chief Executive Officer Bernd Pischetsrieder said yesterday that ``significant'' cost reductions are needed as he doesn't expect economies in Western Europe, the U.S. or South America to improve in the ``short term.'' Carl-Peter Forster, CEO of General Motors Corp.'s German unit Adam Opel AG, yesterday said he can't reaffirm a target of becoming profitable next year.
Turin, Italy-based Fiat's European sales last month fell 16 percent to 88,422 cars. Demand for Volkswagen vehicles dropped 5.8 percent to 227,818 units as Volkswagen-brand sales fell 11 percent while sales of Volkswagen's Audi-brand vehicles rose 4.2 percent.
Wolfsburg, Germany-based Volkswagen will release a new version of the Golf compact car in September. The company has said it expects the car to be the top-selling model in Europe in 2004.
BMW's Decline
Bayerische Motoren Werke AG's total sales fell 9.9 percent to 51,037 vehicles, led by a 14 percent drop in the BMW brand. The Munich-based carmaker's Mini-brand sales rose 15 percent from a year ago to 8,677 cars.
Renault SA sales fell 8.4 percent to 127,334 cars. The Boulogne-Billancourt, France-based carmaker is hoping its new Megane Scenic minivan, which was introduced this week in France, will turn around its sales in the second half of the year.
Sales of General Motors, the world's biggest carmaker, fell 4.7 percent in Western Europe to 122,398 vehicles. Demand at Ford Motor Co., the world's second-biggest carmaker, fell 5.8 percent to 135,019 units.
Mazda Motor Co. led Japanese carmakers' gains with a 45 percent increase to 17,603 vehicles as customers bought its Mazda6 mid-sized sedan, introduced in Europe late last year, and the Mazda2 subcompact model. Japanese brands' combined sales rose 0.5 percent to 149,729 vehicles.
Sales of Kia Motors Corp. of South Korea rose 47 percent to 10,441 vehicles. Total Korean-brand sales in Western Europe rose 9.2 percent to 38,293 units.
``The rise in the euro helps the Japanese a lot,'' Catoire said. It allows them to keep prices low on their vehicles and still make money since many of their costs are in yen and their accounting is in that currency.
Mazda, for example, sells a 75 horsepower version of the Mazda2 for 11,500 euros, compared with the 12,200 list price for PSA Peugeot Citroen's C3 subcompact with the same output.
The euro has appreciated by 11 percent against the yen this year.
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