VW's European market share falls in first month of scandal

VW's European market share falls in first month of scandalVolkswagen AG’s market share in Europe declined in October as steepening discounts in Germany failed to keep customers from shying away in the first full month of sales since the carmaker’s emissions-cheating scandal became public.

The German manufacturer accounted for 25.2 percent of new-car registrations in the region last month compared with 26.1 percent a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said Tuesday in a statement. Carmakers’ sales across Europe rose 2.7 percent to 1.14 million autos, slowing from a 9.8 percent jump in September, as demand at Volkswagen fell 0.8 percent in the company’s first decline since May.

“The main factor in this deceleration in fortunes appears to be the fallout from VW’s emissions scandal,” Kristina Church and Charles Coldicott, analysts at Barclays Plc, wrote in a Nov. 12 report, based on figures from the region’s five biggest markets.

Even before Volkswagen’s rigging of diesel-engine emissions tests came to light in mid-September, the Wolfsburg-based carmaker, Europe’s largest, was losing ground to competitors offering a wider range of sport utility vehicles. Volkswagen managed to keep its market share from narrowing further by deepening discounts. The company can ill afford a drop in sales and weaker profitability while grappling with a growing crisis that it estimates will exceed 8.7 billion euros ($9.3 billion) in fines and repair costs.

The carmaker’s dealers in Germany, Europe’s biggest auto market, offered customers an average 11.2 percent off the sticker price, 1.6 percentage points more than in the previous month, according to trade publication Autohaus PulsSchlag. That contributed to an industrywide incentive increase to 12.2 percent from 11.8 percent a year earlier.

Discounting by Volkswagen has intensified in November, and the company “seems to be aggressively targeting corporate buyers in an effort to counter the diesel scandal,” Ferdinand Dudenhoeffer and Karsten Neuberger of the Center for Automotive Research at the University of Duisburg-Essen wrote in a report this month.

Daimler Jumps

Among the top 10 sellers in Europe, the biggest registration gains last month were posted by luxury-car producer BMW AG, which reported a 13 percent increase; Italian-U.S. automaker Fiat Chrysler Automobiles NV, which sold 7.7 percent more vehicles amid a 70 percent surge at its SUV-focused Jeep brand; and Daimler AG, whose 21 percent jump was propelled by demand more than tripling at the Smart city-car nameplate. Daimler’s Mercedes-Benz premium marque sold 11 percent more cars in Europe.

October was the 26th consecutive month of auto-sales growth, according to the ACEA, which compiles numbers from 27 of the 28 European Union countries as well as Switzerland, Norway and Iceland. Four of Europe’s five biggest car markets expanded, with gains of 1.1 percent in Germany, 1 percent in France, 8.6 percent in Italy and 5.2 percent in Spain. Sales in the U.K., which ranks second in the region, fell 1.1 percent in October.

The U.K. drop marked the country’s first auto-sales contraction in more than 3 1/2 years, Church and Coldicott said in their report. Growth in Spain is likely to continue as only about half the budgeted money has been spent in a government rebate program encouraging trade-ins of older vehicles for new models that use less fuel, according to the Barclays analysts.

Volkswagen’s 10-month market share narrowed 0.4 percentage point to 25 percent as the group’s 6.5 percent sales growth in the period lagged behind the industrywide 8.2 percent expansion. In addition to the VW brand, the manufacturer builds luxury Porsche and Audi models and mass-market Skoda and Seat vehicles.

The German company outlined plans in October to recall 8.5 million vehicles in Europe, out of a total 11 million affected worldwide, to fix a line of diesel engines fitted with software that falsified nitrogen-oxide emissions performance during regulatory tests. Since then, Volkswagen has revealed inconsistencies in carbon-dioxide readings in another 800,000 vehicles, including some fueled by gasoline. Diesel cars make up more than half of the passenger autos sold in Europe.

Other carmakers reporting European sales growth in October included Ford Motor Co., the fourth-biggest auto group in the region, and South Korean manufacturers Hyundai Motor Co. and Kia Motors Corp., which rank 11th and 12th. PSA Peugeot Citroen, Europe’s second-biggest car manufacturer, sold 1.5 percent fewer cars as declines at the Citroen and luxury DS marques more than offset a gain at the Peugeot brand. Third-place Renault SA also posted a group registration decline, dragged down by a drop at the discount Dacia unit.
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