European car sales fall in September

Reuters (Paris) - Car sales in Spain and Italy fell to their lowest September levels in 15 years, and sales in France also dipped, prompting analysts to warn that more bad news may be on the way as Europe's gloomy economic outlook takes a toll.

By contrast, major automakers posted double-digit percentage sales gains for September in the United States.

Italian sales fell 5.7 percent to 146,388 cars in September, the Italian transport ministry said on Monday.

Italy's foreign car association UNRAE said volumes were the lowest since 1996, and orders fell 6.5 percent to touch levels that were the worst since records started being kept in 1998.

"These considerations lead us to see a particularly difficult last part to the year," it said, forecasting a full-year drop in sales of 11 percent.

Spanish sales for September fell 1.3 percent year-on-year to 55,572 cars, industry association ANFAC said on Monday, blaming the grim figures on a VAT sales tax hike combined with the withdrawal of government subsidies.

"We would have to go back to 1993 to find such a meager market," ANFAC said. "The consequences of having such a weak market can be seen in the country's fleet of vehicles, which has an average age of 10 years, one of the highest in Europe."

In the first nine months, Spain saw a 20.7 percent dip in car sales compared with the 2010 period.

In France, the news was better, for now. Car sales fell 1.4 percent, carmakers' association CCFA said. The market held up in an unfavorable economic situation, particularly given that a scrappage scheme was still boosting sales in September 2010.

"The market is slowly going down, but it is resilient," a CCFA spokesman said, adding the association now expects a better outcome than its previous forecast for a fall of 8-10 percent for the full year.

For the first nine months, registrations were still in positive territory, up 0.2 percent.

DIFFICULT MONTHS AHEAD

The darkening economic clouds on the horizon will add uncertainty to the mix, with last year's strong comparison base also setting a high bar.

"The next few months will be more difficult, whether it is end-2011 or the beginning of 2012, especially because of the unfavorable comparison base," said Flavien Neuvy, head of credit provider Cetelem's autos research unit.

"But the market is resisting very well," he said.

France's scrappage scheme, introduced to boost sales amid an industry downturn, ran out at the end of 2010, but drivers could still register cars bought under the scheme until March.

Xerfi analyst Philippe Gattet said in a research note that aggressive promotions by carmakers helped support sales in France. "In any case, automobile statistics in the coming months will definitely be bad," he said.

"We must not lose sight of the fact that the economic context has been getting worse for several months and that the outlook is bad for the French economy," Gattet said.

Xerfi expects the French market to fall 5 percent in 2011.

Italian think tank Promotor said it expects car sales in Italy this year to be just under 1.8 million vehicles, "a level so low as to put at risk the survival of a certain number of dealerships."

Promotor said it was not possible to conceive of a recovery of the car market in 2012 with Italy's economy "on the edge of an abyss."

ASIA, U.S. SALES FIGURES

Japanese auto sales, excluding 660cc minivehicles, rose 1.7 percent in September. Including 660cc minivehicles, sales fell 2.1 percent year-on-year.

In India, Maruti Suzuki, 54.2 percent-owned by Suzuki (7269.T), said September sales fell 21 percent after a strike disrupted production. India's top carmaker said the month-long strike at one of its plants had cost it about $135 million in lost output. The strike ended on Saturday.

In the United States, General Motors Co (GM.N) said the strong U.S. car sales for September showed the U.S. economy was likely to steer clear of a double-dip recession.

Despite fears of a renewed downturn and volatile financial markets, industry wide U.S. auto sales were lifted by the return of customers who had been putting off replacing aging vehicles since the industry's downturn began in 2008.