European Dec. Car Sales Rise 7.7%, Lead to 2004 Gain

Jan. 14, 2005; Bloomberg reported that Western European car sales rose 7.7 percent in December, leading to the first annual gain in three years as Toyota Motor Corp. and Asian competitors introduced new products and Volkswagen AG offered incentives to boost demand.

Sales in December rose to 1.04 million vehicles and 2004 sales rose 2.1 percent to 14.2 million vehicles, the Brussels-based European Automobile Manufacturers Association said today in a faxed statement. Asian carmakers last year increased their market share to 17.3 percent from 16.1 percent a year earlier.

Lower-priced vehicles with better performance, including the Toyota Corolla, and new models such as Bayerische Motoren Werke AG's 1-Series helped manufacturers win customers. The economy in the 12 countries that share the euro probably expanded 1.8 percent last year from 0.5 percent in 2003, the slowest pace in a decade, helping support sales growth.

``The clear trend in the European market is that the premium manufacturers as well as the Asians carmakers are winning market share,'' said Stefan Bauknecht, a fund manager at DWS Investment in Frankfurt, which oversees investments of $160 billion including carmakers' shares.

BMW shares rose 41 cents, or 1.2 percent, to 33.83 euros in Frankfurt. Volkswagen fell 0.2 percent to 35.32 euros, while DaimlerChrysler AG rose 0.8 percent to 35 euros. Peugeot rose 0.6 percent to 47.81 euros and Renault SA gained 0.9 percent to 64.45 euros.

Car sales in Western Europe this year should rise by about 1.5 percent, said Eric-Alain Michelis, an analyst at Societe Generale in Paris, led by French, German and Spanish demand.

BMW Surge

BMW sales in Western Europe surged 25 percent last month to 61,124 units as the 1-Series and the X3 sport-utility vehicle helped the company win customers. Its market share increased to 4.8 percent from 4.4 percent last year.

The Munich-based company expects another year of record sales in 2005, Chief Executive Officer Helmut Panke said this week in Detroit at the North American International Auto Show. The company sold 1.21 million vehicles worldwide last year.

``Customers are looking at the whole package offered by carmakers, the price and performance especially,'' said Fabian Kania, an analyst at Helaba Trust in Frankfurt. ``The winners were BMW and the Asian carmakers -- Toyota, Hyundai, Kia.''

Sales at Hyundai increased by 57 percent last month, helping the Korean company report a 22 percent gain for the year. Kia Motor Corp., South Korea's second-largest carmaker, almost doubled sales in December, while 2004 sales rose by 44 percent. Hyundai's market share rose to 2.1 percent from 1.7 percent, while Kia's went to 1.1 percent from 0.8 percent.

Winning Buyers

Toyota and Hyundai are winning buyers with cars that cost less and offer more features than competing models at Volkswagen and other European manufacturers.

Hyundai's Accent hatchback, which competes with Volkswagen's best-selling Golf, costs 13,990 euros ($18,342) for a standard model, 1,230 euros less than a Golf. Accent buyers get a four-door car that accelerates from zero to 100 kilometers (62 miles) per hour in 12.9 seconds. The two-door Golf takes 14.7 seconds to reach that speed, according to Munich-based ADAC, the German automobile club.

Volkswagen's sedans are also pricier than competitors' vehicles. Its 1.6-liter Passat sells for 22,750 euros, while Toyota's 1.8-liter Avensis costs 21,400 euros.

December sales at Toyota, the world's second-largest carmaker, increased 15 percent, while Honda Motor Co. boosted sales by 40 percent. Both carmakers scored in the top five in a vehicle satisfaction study of German car owners by 3hm Automotive this year. Toyota's market share rose to 5 percent from 4.8 percent.

Market Share

``The sales trend has improved and the Japanese manufacturers are especially winning market share, while BMW is far ahead with its products,'' said Jochen Kirst, who heads a team that trades several billion euros in equity-linked securities each year at WestLB AG.

Volkswagen, Europe's largest carmaker, sold 207,087 vehicles last month in the region, a 8.9 percent gain. The German company benefited last month from a 22 percent rise in industry sales in its domestic market, where almost one in three cars sold is a Volkswagen, Audi, Skoda or Seat brand vehicle. For the year, its market share fell to 18.1 percent from 18.2 percent.

Volkswagen in the last two months of 2004 offered 2,500 euros of discounts to French buyers of some diesel-powered versions of the Golf. The company also promoted a package, including radios, heating and cooling systems, worth 975 euros.

GM Sales

General Motors, the world's largest carmaker, reported a 7.2 percent gain in sales last month to 102,652 vehicles. For 2004, the company sold 1.39 million cars in Western Europe, a 0.6 percent increase. Its market share fell to 9.6 percent from 9.7 percent.

General Motors is offering incentives of as much as 3,500 euros on the small Corsa and 1,600 euros on the compact Astra to attract buyers. The carmaker increased rebates in the U.S. to lure buyers back into showrooms after the Sept. 11 terrorist attacks, and ended up conditioning customers to expect discounts.