Incentives pushed French auto sector orders up 59% in December

Dow Jones Newswires (Paris) - French auto sector orders surged 59% in December compared with the previous month, as car owners rushed to take advantage of a government scrapping incentive before it was phased out at year-end, industry statistics released Friday show.

Car makers are racing to meet the blip in demand that's showing up in registrations data as the cars ordered at year-end are delivered to end-customers with a lag of one or two months. In January, French car registrations were 8.2% above those of the same 2010 month, and February's figures will also be underpinned by the surge in orders late last year year.

However, industry participants said that without the artificial government supports retail demand is already fading despite massive discounting by the car makers as they struggle to preserve market shares.

French car makers Renault SA (RNO.FR) and PSA Peugeot-Citroen (UG.FR) expect the French market to contract by about 8% this year compared with 2010, reflecting the withdrawal of incentives.

The National Statistics Institute's data show a 24% increase in automobile industry orders in the last quarter of 2010 compared with the same 2009 period, and they were also 24% above those of the July to October period.

By contrast, overall order intake among French industrial companies were up 7.3% in December compared with November's level. Over the last quarter of 2010, overall orders increased 12% year-on-year and were up 5.2% from the third quarter.

The data-gathering agency said the automobile order surge in December was mainly from France, but also partly reflected increased demand from euro-zone countries.