Renault, GM lead Europe sales drop as oil prices rise

Industrywide sales fell 4.1% to 1.5 million vehicles from 1.55 million units a year earlier, the Brussels-based European Automobile Manufacturers Association said in a statement today. First-half sales gained 1.3% to 8.32 million units. “Those numbers are atrocious,” Stephen Pope, head of equity research at Cantor Fitzgerald in London, said. “The recent uptick in oil prices has to make producers go through an entire rethinking of engine efficiency.” Renault and GM sales are falling as customers turn to competitors' newer models such as Fiat SpA's Grande Punto and Toyota Motor Corp.'s Yaris subcompact. Consumers are also holding back on vehicle purchases as fuel prices surge. Crude oil for August delivery rose above $78 a barrel for the first time last night in after-hours trading on the New York Mercantile Exchange. “This drop seems to confirm that market conditions remain uncertain,” the association said. More religious holidays fell in June this year than last year, leading to fewer working days for the month. June sales at Renault, France's second-largest carmaker, fell 13% to 146,345 units. The Boulogne-Billancourt, France-based company's first-half market share declined to 9.1% from 10.2% a year ago. Renault's shares fell as much as € 2.05, or 2.5% , to € 79.55 and were down 0.4% to € 81.25 as of 10:39 a.m. in Paris. The shares are up 18% this year, valuing the carmaker at € 23.2 billion ($29.4 billion). Chief Executive Officer Carlos Ghosn on May 4 reiterated a forecast that earnings before interest, taxes and one-time items will decline to 2.5% of sales this year from a 3.2% margin in 2005 as Renault prepares to release 26 new or replacement vehicles by 2009. Ghosn, also Nissan Motor Co.'s chief executive officer, is in Detroit today for talks with GM's CEO Rick Wagoner about a possible three-way alliance of the carmakers. Ghosn said in an interview yesterday that all options for a tie-up are on the table. GM, the world's largest automaker, reported an 8.3% decline in European sales last month to 158,867 vehicles. The Detroit-based carmaker is counting on the introduction of a new version of the Opel Corsa subcompact this year and the expansion of its Chevrolet division to win new customers in 2006. European sales at Nissan, Japan's second-largest automaker, fell 17% in June to 32,050 vehicles, with first-half sales down 15% to 172,918 units.”The Renault numbers are dreadful, the Nissan numbers are dreadful, and the GM numbers are dreadful,” Pope said. “The big question is, what will they talk about in Detroit today?” Ford's European sales declined 3.7% to 158,134 units in June. Ford's market share in the first half fell to 10.7% from 11% last year. The Dearborn, Michigan-based carmaker sold 1.63 million cars in Europe in 2005, or 24% of Ford's worldwide sales. Fiat, based in Turin, Italy, and Toyota, the world's second- largest carmaker, bucked the overall market trend, posting June increases. Fiat's sales rose 10% to 106,988 units. Toyota's sales climbed 8.3% to 87,556 vehicles. Both carmakers have been posting gains this year on the strength of new models. Fiat's first-half European market share jumped to 7.7% from 6.5% a year earlier. European June sales at the main brand rose 14% to 81,589 cars, while the Alfa Romeo brand grew 15% to 13,996 vehicles. Models including the Punto, a new version of its best-selling car, and the Alfa Romeo 159 sedan, introduced at the end of 2005, contributed to the company's fifth consecutive quarterly profit in the first three months of 2006. Toyota's first-half market share increased to 5.7% from 5.4% a year earlier. In addition to the Yaris, the Toyota City, Japan-based carmaker released a new version of the RAV4 sport-utility vehicle this year. “Fiat and Toyota are up basically because of the new high-volume products,” said Adam Jonas, an analyst with Morgan Stanley in London who has an “underweight” rating on Fiat shares. “They also have relatively easy comparison figures for last year” as sales tapered off in 2005 before the introduction of the new models. The German carmakers' sales all either gained in June or decreased at a lower rate than the market as whole. Volkswagen AG, Europe's largest carmaker, posted a 2.1% sales decline in June to 289,566 vehicles, led by a 6.4% drop at its Skoda brand. The Wolfsburg, Germany-based carmaker's first-half sales in Europe gained 7% on the strength of the namesake brand, which climbed 12% as consumers bought a new version of the Passat sedan. Bayerische Motoren Werke AG, the world's largest maker of luxury cars, reported a 2.8% decline in European sales last month to 77,551 vehicles. BMW CEO Helmut Panke said July 12 the luxury carmaker was “well on course” to meet a goal of boosting 2006 pretax profit 22% to 4 billion euros. Stuttgart, Germany-based DaimlerChrysler AG, the world's fifth-largest carmaker, posted a 1.2% sales increase in the region to 88,064 units. The company's Mercedes-Benz luxury division will bring out a new version of the C-Class compact next year. That model competes with BMW's 3-Series. The June drop was the first this year since April in the association's figures, which include 23 of the 25 European Union countries plus Switzerland, Norway and Iceland. (Bloomberg)