Sales boom in UK, Europe on incentive schemes

NEW-CAR sales in the UK rose almost 30 per cent last month compared with January 2009, prompting the British government to extend its scrappage scheme until the end of March and mirroring a strong return to form for the automotive sector across mainland Europe.

The notable exception was Germany, which experienced a fall of 4.2 per cent (to 181,500 units) in new-vehicle registrations last month – its second successive fall and, according to overseas reports, its lowest total since German unification in 1990.

Demand has fallen in Germany since the government ended its scrappage scheme last September. In contrast, sales have increased sharply in countries across Europe where incentive schemes are continuing.

French new-car sales rose 14 per cent last month on the back of the scrappage scheme operating there – Renault sales shot up 59.1 per cent and PSA Peugeot Citroen sales climbed 17.9 per cent – while in Spain new-car sales increased 18.1 per cent and Belgium experienced strengthening demand with a 3.5 per cent rise.

Left: Vauxhall Corsa. Below: VW Polo.

In Italy, prime minister Silvio Berlusconi told reporters that the government would continue to offer some form of incentives after sales on new cars rose 30.2 per cent in January – and orders dropped 10 per cent after the incentives ended.

However, Reuters reports that any renewal of incentives in Italy would be linked to Fiat safeguarding jobs at Italian assembly plants.

Workers have staged strikes at a number of Fiat factories this week in protest over plans to close a plant in Sicily and to temporarily close all its Italian plants for two weeks from February 22 to offset lower demand – despite the company recording a 30.4 per cent rise in sales last month compared to January 2009.

The government, which according to Reuters has been discussing plant closures and output targets with Fiat, said the short-term closures would make talks on incentives more difficult.

“We are examining the possibility of renewing them (incentives), but Fiat does not seem interested in them,” Mr Berlusconi said.

In the UK, the Society of Motor Manufacturers and Traders (SMMT) recorded a 29.8 per cent increase in new-car registrations, to 145,479 units – the market’s seventh successive rise.

The government’s scrappage scheme continued to boost the market, accounting for 17.8 per cent of new-car sales, although new vans and truck registrations were down 34.5 per cent (to 13,099 units).

“The 29.8 per cent increase in January new-car registrations provides a better than expected start to 2010 for the UK motor industry,” said SMMT chief executive Paul Everitt.

“Scrappage continues to lift demand successfully and today’s announcement of a continuation of the scheme to the end of March will allow the maximum number of people to benefit from the budget that’s still available.

“(But) new van and truck registrations continue to reflect a weak economic recovery and businesses reluctant to commit to new investment. These are the lowest January truck registrations since 1992, leaving most truck-makers very disappointed at the slow start to the year.

“It is extremely important that government uses the upcoming budget to encourage new investment in capital goods and help rebuild business confidence.”

Ford’s Fiesta light car was the best-selling model in the UK last month, as it was for the full year in 2009. The Blue Oval’s Focus small car was second, ahead of GM’s Vauxhall Corsa light car (previously sold as the Barina in Australia, before Holden switched to Daewoo-sourced cars), Volkswagen’s Polo and the Vauxhall Astra.

While car-makers and industry representatives are positive about the early sales results, most believe they will experience difficulties in the second quarter of 2010 and beyond as government incentives grind to a halt.

Reuters reports that Germany’s VDIK foreign car-makers’ association predicts that sales in 2010 will be down about one million units on 2009 (to around 2.8 million) due to the withdrawal of the scrappage scheme.

Of the 3.8 million new vehicles sold last year in Germany, 23 per cent of them were attributed to scrappage.

In the UK, the SMMT expects demand to fall nine per cent to 1.82 million units for the full year.

“Industry expects another difficult year with the availability of finance, consumer confidence and sustaining demand post-scrappage, key to performance in the second half of the year,” Mr Everitt said.