Japan, Europe November car sales fall

Japanese car sales slumped for the third straight month as the euro zone crisis threatened sales, while economic woes and the end of scrappage schemes threatened a bleak start to 2011 for Europe's car markets.

In Europe, while austerity measures and economic concerns will likely hit spending power and consumer confidence in the coming months, the end of scrapping incentives had a more immediate impact on November automobile sales.

In Spain, where bonuses to boost new car sales ran out at the start of July, coinciding with an increase in value-added tax, car sales fell 25.5 percent year-on-year in November, Spanish carmakers' association ANFAC said.

"Getting consumer confidence back, reducing the unemployment rate and a return to a more normal credit situation, are fundamental factors to returning the Spanish market to levels more in line with the economic development of the country," ANFAC said in a statement.

Industry association CCFA said French car sales for November dropped 10.8 percent, less than expected.

A 500 euro scrapping scheme, half the original bonus offered, is still in place in France, while carmakers including domestic rivals PSA Peugeot Citroen (PEUP.PA) and Renault (RENA.PA) are proposing generous money-back offers to drivers.

The imminent end of the scheme helped car sales post a limited fall against a strong November 2009. Last November, just before the scrapping scheme was cut from its initial 1,000 euros, sales surged 48.4 percent from a weak November 2008.

"Drivers are saying to themselves, 'At the end of December it's finished; we have to hurry to order a new car'," said Flavien Neuvy, head of the automobile industry research department at French consumer credit organization Cetelem.

A CCFA spokesman added: "We have already passed the 2 million vehicle marker in 11 months, so we could finish the year with 2.2 million registrations."

In the first 11 months 2,023,410 passenger cars were registered, a 2.4 percent dip on the same period of 2009.

Job fears are the main economic factor that will affect car sales in the coming months, said Neuvy.

"If the employment market picks up a little, that will return some confidence to consumers," Neuvy said. "It's really the subject that worries consumers."

French third-quarter unemployment data will be released on Thursday.

EURO ZONE WOES

The euro zone's troubles add to the woes of Japanese automakers, which are in for a sharp, long drop in domestic vehicle sales after the government's subsidies on some fuel-efficient vehicles ended in September.

In India, top car maker Maruti Suzuki (MRTI.BO) reported a 28 percent rise in November sales, but exports fell 12 percent, with most of those cars bound for Europe.

Excluding 660cc minivehicles, sales in Japan sank 30.7 percent to 203,246 units last month, marking the biggest fall on record for November, despite one more selling day in the month than in 2009. Top-ranked Toyota Motor's (7203.T) sales fell 35 percent, while Honda Motor's (7267.T) dropped 38 percent.

"There's no sense that sales have hit a bottom," said Michiro Saito, general manager at the Japan Automobile Dealers Association.

Including minivehicles, which get preferential tax treatment and are compiled separately, vehicle sales in Japan dropped 26 percent in November.

STRIKE HITS HYUNDAI

Hyundai Motor (005380.KS), South Korea's biggest automaker, fared better but also reported a 13 percent fall in its domestic market, partly due to difficult comparisons from a year ago.

Its global sales rose 1.4 percent to 314,569 units, however, as it further outpaced rivals in Europe and other major markets.

Growing concerns over the European debt crisis may hit overseas sales in the next few months, but analysts said Korean automakers were set to outperform the market thanks to new models, competitive compact cars and a weak local currency.

One worry is the strike, now in its third week, at Hyundai's biggest local production base.

Overall sales at India's Maruti Suzuki, 54.2 percent owned by Japan's Suzuki Motor Corp (7269.T), rose strongly, and it is aiming to tap markets outside Europe.

"The euro zone crisis could affect sales of Maruti Suzuki, which has some exposure to that market, and it is now trying to sell to non-European countries," said Umesh Karne, a research analyst at Brics Securities in Mumbai.