VW, Fiat Lead Second Monthly Gain in Europe Car Sales

March 16, 2006; Chad Thomas writing for Bloomberg reported that Volkswagen AG and Fiat SpA led a gain in European car sales in February, while General Motors Corp. and Ford Motor Co. lost market share for the second month in a row.

Industrywide sales climbed 2.1 percent to 1.08 million vehicles from 1.06 million a year earlier, the Brussels-based European Automobile Manufacturers Association said in a statement today. Two-month sales gained 2.5 percent to 2.34 million units.

Ford and GM's sales declined this year as customers were attracted to new models from competitors such as Volkswagen's Passat midsize sedan and Fiat's Grande Punto subcompact. Toyota Motor Corp. also posted a February gain in market share. European car purchases account for about a quarter of worldwide sales.

``The European car industry is really delivering the type of product that people want to buy, at the price that they are willing to pay,'' said Stephen Pope, head of equity research at Cantor Fitzgerald in London.

Fiat's shares rose 18 cents, or 1.9 percent, to 9.31 euros. The stock has gained 27 percent in 2006. Volkswagen shares fell 17 cents, or 0.3 percent, to 58.15 euros. The stock has risen 30 percent this year.

Sales at Volkswagen, Europe's largest carmaker, rose 9.1 percent from a year earlier to 206,380 vehicles in February. The company also has released the Fox city car, a redesigned Audi A4 luxury compact sedan and Golf Plus compact cars over the past year. The group's sales were led by a 15 percent gain at the namesake brand to 108,553 units.

Market Leader

``The February figures strengthen our position as the market leader in Europe,'' Michael Kern, Volkswagen brand sales and marketing chief, said in an e-mailed statement.

Sales gains for the Passat, which starts at 22,100 euros ($26,700) in Germany, helped the carmaker increase its European market share to 19.4 percent in the first two months of the year from 17.4 percent last year.

``With Volkswagen, you clearly see the effect from the full availability of the Passat sedan and station-wagon versions,'' said Michael Raab, an analyst with Sal Oppenheim in Frankfurt with a ``buy'' recommendation on the stock.

The Fiat group's European sales rose 12 percent to 95,013 vehicles, helped by an 18 percent gain at the Fiat brand. The group's European market share for January and February climbed to 8.6 percent from 7.6 percent. Turin, Italy-based Fiat sells the Punto in Germany at a starting price of 10,990 euros, according to the carmaker's Web site.

Fiat Models

Fiat introduced new models such as the Grande Punto subcompact, a new version of its best-selling model, and the Alfa Romeo 159 sedan at the end of 2005, contributing to the company's first car-division profit in 18 quarters in the last three months of 2005.

The 107-year-old company has sold more than 130,000 Puntos since putting the model on sale in September, reversing a decline in market share.

``They were pretty much bottomed out from a volume point of view,'' Raab said. ``When you are coming from such a low point, it is pretty easy to post positive sales growth.''

General Motors, the world's largest automaker, reported a 0.6 percent decline in European sales last month to 109,232 vehicles. GM's European market share declined in the first two months of the year to 9.9 percent from 10.3 last year.

The Detroit-based company is counting on the introduction of the Cadillac brand in Europe and the expansion of its Chevrolet division to win new customers in 2006. General Motors sold 1.63 million vehicles in Europe last year, accounting for 18 percent of the company's global sales.

Ford Sales

Ford's European sales declined 4 percent to 105,006 units, leading to a market share decline for January and February to 10.4 percent from 10.9 percent. The Dearborn, Michigan-based carmaker sold 1.63 million cars in Europe in 2005, or 24 percent of Ford's worldwide sales.

European consumers are purchasing more vehicles as economic growth picks up. The economy of the dozen nations sharing the euro will expand about 2.1 percent this year, up from a December forecast of 1.9 percent, the European Central Bank said March 2.

Car sales in the U.S., the world's largest market, increased 3.8 percent in the first two months of the year to 2.4 million vehicles, according to Woodcliff Lake, New Jersey-based Autodata Corp. Chinese passenger car sales in January and February rose 68 percent from a year earlier to 763,600 units, according to the China Association of Automobile Manufacturers web site.

Peugeot Sales

Sales at PSA Peugeot Citroen, Europe's No. 2 carmaker, rose 1.3 percent to 163,034 vehicles, while Renault SA's sales slumped 5.7 percent to 101,230 vehicles. The European market will stagnate this year, Peugeot Chief Executive Officer Jean-Martin Folz and Renault CEO Carlos Ghosn both said last month.

Toyota's sales rose 5.5 percent to 59,320 cars last month. Toyota, the world's second-biggest automaker, began rolling out new versions of the Yaris subcompact and RAV4 sport-utility vehicle in January. The Lexus luxury division nearly tripled European sales to 2,112 units in February from 760 vehicles last year. Toyota's European market share last month increased to 5.5 percent from 5.3 percent.

Bayerische Motoren Werke AG, the world's largest maker of luxury cars, reported a 1.5 percent increase in European sales to 50,479 vehicles. BMW introduced a new version of the 3-Series sedan last year, helping the Munich-based company post record sales in 2005.

Stuttgart, Germany-based DaimlerChrysler AG, the world's fifth-largest carmaker, posted a 1.9 percent sales increase in the region to 56,143 vehicles. 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.

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