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European car sales rise led by Toyota, General Motors

European new car sales rose 1.1% in January, led by gains at Toyota Motor Corp. and General Motors Corp., as growth in Eastern Europe boosted purchases.

Sales increased to 1.29 million vehicles from 1.27 million units a year earlier, the Brussels-based European Automobile Manufacturers Association said in a statement today. Demand surged 17% in Eastern Europe, while the Western European market stagnated, the association said. Toyota, the world's second-largest carmaker, posted a gain of 21% in January to 82,404 vehicles, while GM, the world's largest, rose 7.6% to 132,958 units. „It really shows car buyers want strong reliability, which is where Toyota score wells, and stylish, `feel good' factors, and that has been delivered by GM,” Stephen Pope, head of equity research at Cantor Fitzgerald in London, said. „The design and marketing of the Astra and Corsa have been brilliant.” Economies in Eastern Europe, including Poland and the Czech Republic, have grown almost 5% every year since 2003, according to the IMF. Western European growth last year was about half that rate. Growth in Eastern Europe contrasted with a decline in Germany, the region's largest market, where consumers held back from making large purchases after the value-added sales tax was raised at the beginning of the year. „The picture is better than the overall number shows” because this is affected by a negative German performance, which was expected, said Gian Primo Quagliano, research director at Bologna, Italy-based Promotor International SpA, in an e-mailed statement today.

Fiat SpA boosted sales 5.2% to 111,224 vehicles, while market share rose to 8.7% from 8.3% on demand for the Grande Punto. The Alfa Romeo 159 sedan, introduced at the end of 2005, also contributed to the gain. Fiat will release the Bravo compact model early this year. An improvement at Fiat's premium brands, including Alfa Romeo, Maserati and Ferrari, have helped Fiat's profit. The divisions are strengthening ties with each other by sharing components and sales networks. „Fiat is for sure one of the most appealing stocks in the European industry,” said Alessandro Capuano, a trader with IG Markets in London. Fiat sold more cars last month than larger Renault SA, the French carmaker led by Carlos Ghosn. Renault sold 102,290 units in January, a decline of 7.5%, as models aged. The company's market share declined to 8% from 8.7%.

Ghosn has set a goal of boosting the operating profit margin to 6% in 2009, helped by sales of its Romanian-made Logan low-cost car as well as cost cutting. PSA Peugeot, Europe's second-largest carmaker, boosted sales by 0.5% to 174,482 units, losing 0.1%age points of market share at 13.6%. Recently appointed CEO Christian Streiff plans to increase profit after a €127 million ($167 million) loss in the H2. Toyota, the world's largest carmaker by market value, increased market share by a full point to 6.4% from the year earlier. The Toyota City, Japan-based carmaker has released new versions of the RAV4 sport-utility vehicle and Yaris small car. Toyota aims to build 4% more vehicles this year, potentially becoming the world's largest carmaker by volume and surpassing GM, with popular models such as the Camry and Prius cars. Toyota in September said it expects to sell 1.3 million vehicles annually in Europe by 2008.

GM's market share increased to 10.3% from 9.7%. A new Opel Corsa small car as well as low-priced Chevrolet models have helped GM win back customers from PSA Peugeot and Renault SA in the region. Ford Motor Co., the region's third-largest carmaker, sold 2.2% more vehicles in January, growing twice as fast as the market. Volvo sales surged 23% to 23,761 units, while the main Ford-brand declined 0.4% to 109,453 units. Sales at Volkswagen AG, Europe's largest carmaker, declined 3.8% to 239,089, as sales at the namesake Volkswagen brand plummeted 9% to 120,988 units. Volkswagen's Czech unit Skoda Auto AS posted a sales increase of 14%. Volkswagen CEO Martin Winterkorn yesterday said 2007 will be a „difficult” year for the Volkswagen brand, which has no major product launches planned until 2008. The rest of the German carmakers also declined in January, with DaimlerChrysler AG's sales dropping 2.3% and Bayerische Motoren Werke AG's sales falling 1.1%. (Bloomberg)