French car sales dip as subsidies end; Italy ails

Reuters (Paris) - French car sales fell 11.2 percent in April reflecting the end of a scrappage scheme, a dip overshadowed by the 51 percent plunge in Japan's auto sales following a massive earthquake on March 11.

In Italy, where state incentives stopped in March 2010, new car sales confirmed the deep crisis of the auto sector by hitting the lowest level in 15 years despite a more modest 2.2 percent annual decline.

Japanese new vehicle sales sank to the lowest monthly tally on record, as domestic automakers felt the full brunt of the earthquake. In contrast, South Korea's Hyundai Motor (005380.KS) and Kia Motors (000270.KS) benefited from Japanese automakers' woes to post double-digit global sales growth.

France's highly successful scrapping incentive scheme ran out in December 2010, but drivers who bought cars as part of the scheme could register them until the end of March 2011.

"The big winners of last year with the scrapping scheme are the worst-affected by this fall," a spokesman for French car makers' association CCFA said on Monday.

In Italy, car sales fell for the 13th month in a row, surprising analysts who had expected a return to growth.

"The worrying aspect is the total number of car sales, which is so low that we need to go back 15 years, to the previous deep Italian car market crisis of 1995, to find more depressed numbers," car industry think thank Promotor said in a statement.

In France, car sales rose 4 percent in the first four months of 2010. CCFA said 169,453 new passenger cars were registered in April, which had one fewer working day than April 2010.

In Italy, the total number of new cars sold last month fell to 157,309, with leading domestic car maker Fiat (FIA.MI) further eroding its Italian market share to 28.7 percent, data from the Italian transport ministry showed. Orders were up 10 percent in the January-April period from a year earlier, the Italian association of foreign auto makers UNRAE said.

Supply problems affecting the sector were not helping, the CCFA spokesman said: "The auto sector was already having trouble meeting demand, and the Japan problem is only going to make the situation worse."

Many carmakers source electronic components from the region of northeast Japan worst-affected by the natural disaster, whose aftermath is disrupting the global auto supply chain.

Car makers have relied on stocks to maintain production, but many have warned there could be problems in the coming months as suppliers struggle to restart production and sourcing components elsewhere is a costly and complicated option.

Sales of light utility vehicles fell 6.4 percent in April and rose 4.6 percent in January-April in France.

Renault (RENA.PA) saw a 19.1 percent drop in group passenger car sales last month, while PSA Peugeot Citroen (PEUP.PA) saw group car sales fall 21.1 percent.

Volkswagen (VOWG_p.DE), Europe's largest carmaker, saw a 2.1 percent increase in April group passenger car sales in France, while Japan's Toyota (7203.T) and Nissan (7201.T) sales rose 27.4 percent and 25.6 percent, respectively.

"The French market is returning to normal (after the scrapping scheme)," said Flavien Neuvy, head of the automobile industry research department at French consumer credit organization Cetelem.