Sales of new French vehicles plummet after subsidies withdrawn

Kuwait News Agency (Paris) - Sales of new cars and light utility vehicles in France plummeted by 21.6 percent in January to 179.850 compared with January 2011 on a day-to-day comparable basis, the Automobile-Makers Committee said in a statement Wednesday.

Sales of private automobiles fell 24 percent to 147,143 and light vehicle sales declined 7.0 percent to 32,707 units on an unadjusted basis.

The Committee noted, however, that sales of industrial trucks had risen 6.4 percent to 4,185 last month compared with the same month a year ago.

The sharp decline in private car sales was attributed to the withdrawal of generous subsidies for purchase of new cars combined with the scrapping of older models.

The variable subsidies sometimes reached several thousand dollars and were combined with commercial offers from car outlets. This gave a strong boost to purchases last year.

Renault Automobiles was the big loser in January, with sales declining over 32 percent, while Peugeot-Citroen saw its sales fall by 27 percent. Sales of foreign makes fell by 7.3 percent in the same period.

The automobile market is likely face serious challenges this year in view of the state of the French economy, which is headed into recession at the end of the first quarter. Increasing job losses and cost-of-living difficulties are also weighing on consumers and growth for this year has been shaved to 0.5 percent instead of earlier forecasts of 1.0 and even 1.75 percent in mid-2011.