European car market drops for third straight month

[NINETY EIGHT REGENCY]

European car market drops for third straight month

July 15, 2010 08:16 CET

FRANKFURT (Reuters) -- The European car market fell in June for the third straight month as the artificial boost from scrapping schemes across the continent continued to abate, hurting sales for Fiat S.p.A., Ford Motor Co. and Toyota Motor Corp.

Registrations of new vehicles in the European Union dropped 6.9 percent to 1.34 million units last month driven mainly by sharp declines in Germany and Italy, according to data published on Thursday by the European industry association ACEA.

Hardest hit among major brands was the Fiat marque, heavily dependent on both its domestic Italian market as well as demand for small cars that were so inflated by government-sponsored scrapping schemes in recent months.

Its figures revealed a 21 percent plunge while it relinquished just over one full percentage point of market share in the EU. Its Lancia brand performed even worse.

Meanwhile, Ford lost a lot of volume from its Fiesta subcompact and Focus hatchback models. New registrations tumbled nearly 20 percent.

Toyota also weighed on the market with a 15 percent decline in its sales, possibly a continued after-effect from the safety scandals that rocked the company earlier this year.

VW's Spanish brand Seat incurred a 16 percent drop in demand, despite a sharp rebound in its domestic market. Seat relies over-proportionately on sales of its Ibiza subcompact.

Among the winners last month were Renault as well as General Motors Co.'s Opel/Vauxhall unit.

Opel has recently enjoyed a boost from its new Astra hatchback that first hit markets at the very end of last year. It also had some support from the next-generation Meriva small monocab that debuted in markets in mid-June.

On Tuesday, Ford maintained its forecast for a drop in the market of anywhere between 5.6 percent to almost 12 percent this year.

"We will not sacrifice profitability for volume or share, as some of our competitors seem to be doing. We believe such unsustainable heavy discounting only damages brand reputation and further weakens the market," Ford of Europe sales chief Ingvar Sviggum had said at the time.

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