BERLIN–Growth in new car sales in top European markets in October eased to the slowest pace in five months, as Volkswagen AG’s diesel crisis hit the region’s largest manufacturer and sales growth in the big five markets weakened, the European Automobile Manufacturers’ Association said Tuesday.
New car registrations, a reflection of sales, in the European Union rose 2.9% in October to 1.1 million vehicles. Major volume manufacturers Volkswagen, PSA Peugot Citroën, Renault SA and General Motors Co unit Opel/Vauxhall lost ground, while sales of rival Fiat Chrysler Automobiles NV surged on strong sales of its namesake Fiat brand and a 74% jump in sales of its Jeep brand. Ford Motor Co.’s European unit eked out a small increase.
Premium car makers shrugged off the weakness seen in the mass market. Daimler AG posted a 21% increase in new car sales, pushed by surging sales of its Smart luxury compact brand. BMW AG sales rose nearly 14% and sales of Volkswagen’s Audi and Porsche brands rose 4.1% and nearly 14% respectively.
The impact of Volkswagen’s diesel scandal still seems limited to the German car maker. Volkswagen’s share of the EU new car market fell slightly to 25.1% in October from 25.9% a year earlier.
Sales of Volkswagen’s volume car brands declined. Sales of the namesake VW brand in the EU fell 0.2% in October, while sales of its Skoda brand declined 2.6% and SEAT dropped 11.4%.
Despite the weaker sales in October, analysts don’t see signs that Volkswagen’s emissions scandal is hitting the broader industry.
“Although year-on-year growth slowed slightly in October, the European recovery still looks on track and relatively undented by the VW emissions scandal,” said Arndt Ellinghorst, an analyst at Evercore ISI.
Mr. Ellinghorst predicted that Volkswagen would continue to suffer from the emissions scandal and sales in the 12 months following the Sept. 18 disclosure would fall 8.5% from the previous 12 months.
The European manufacturer’s group couldn’t say whether Volkswagen’s diesel crisis is causing a shift toward gasoline-powered vehicles in the EU.
“It’s still too soon to say,” a spokeswoman said. “We still don’t have that level of detail from the market for October.”
Sales growth weakened in the EU’s “Big Five” car markets–Germany, the U.K., France, Italy and Spain. The U.K. slipped 1.1%, the first monthly decline in Europe’s second-largest car market since February 2012.
The core Western Europe region grew 2.5% to 1.06 million vehicles in October and rose 8.1% to 11 million vehicles in the first 10 months of the year.
The rate of growth in the EU in October was the slowest since May, when new car sales rose 1.3%, and follows 9.8% growth in September. New car sales in the EU rose 8.2% to 11.5 million in the first 10 months of the year, slowing slightly from the 8.8% increase in the first nine months.
European car sales were hit by fewer shopping days than the year before and weakness in the biggest European markets. Sluggishness in Germany, France and the U.K. couldn’t be offset by stronger growth in Spain, Italy and Portugal, which are still recovering from low levels during the euro crisis.
Nevertheless, the recovery of European new car sales remains on track, Peter Fuss, automotive analyst at Ernst & Young, said.
“Thanks to the continued positive economic environment, low financing costs, low fuel prices and high discounts, the European new car market will remain on the growth track in the mid-term–though at lower rates of growth than in the first three quarters of this year,” he said.
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