Passenger-car registrations in Germany surged 5 percent to 274,804 in May, providing a glimmer of hope that the auto industry is still recovering in the country. Other European markets like France and Spain also logged higher year-on-year car sales in May. In the first five months of 2014, German registrations rose 3 percent to 1.26 million units.
Local brands like Porsche and Opel posted growths of 11 percent and 9 percent, respectively, helping boost registration figures in the country, according to the Federal Motor Transport Authority (KBA).
On the other hand, luxury brands Mercedes-Benz and BMW logged drops of 0.5 percent and 5 percent, respectively, in German registrations, as they review the cost structure of their German business and stopped short of heavy discounting. Volkswagen-brand saw its sales in May jump 2 percent.
While there are indications that the Europe auto market is recovering, excessive capacity and steep discounting distort the real level of demand. Mike Tyndall, an autos analyst at Barclays, remarked that incentives went up in Germany while the most generous ones are being offered by Peugeot, Citroen and Opel.
Average incentives for Peugeot and Citroen were at 24 percent and for Opel was 25 percent, according to Tyndall. He noted that sales growth in Germany was inflated by the fact that registrations in the same period in 2013 were particularly weak.
In France, vehicle sales surged 3 percent to 740,121 in the first five months of 2014, prompting the country’s CCFA industry association to mull raising its 1-percent growth full-year forecast in June.
Sales in Spain, meanwhile, jumped 16 percent in the five-month period, still helped by a government subsidy scheme that provides a rebate to new buyers for turning in their old cars. [source: automotive news - sub. required]