French New Car Sales Take a Tumble in August

PARIS, Sept 2 Reuters is reporting that French sales of new cars fell for a fourth consecutive month in August, tumbling 17.7 percent in the latest sign that a nascent economic recovery in the euro-zone's second largest economy is flagging.

French carmaking association CCFA said on Monday that sales of new passenger cars fell to 121,889 units in August from 148,165 in the same month last year.

Sales at French carmaker Renault led the decline, falling 29.0 percent in the month to 27,311 units, while domestic rival PSA Peugeot-Citroen saw its sales fall 17.4 percent to 42,136 vehicles.

At 1145 GMT, shares in Renault and Peugeot were down 2.78 percent and 1.18 percent, respectively -- broadly in line with a weaker European auto sector.

The CCFA said the sharp decline was partly attributable to consumers waiting to make purchases due to the scheduled introduction of new models later this year.

It also cited the "pont" or bridge effect from French vacations in mid-August.

But even after stripping out differences in the number of business days, the drop was still a robust 13.8 percent. For the first eight months of the year, sales are down 5.2 percent from the strong levels seen in 2001.

Not all manufacturers were hit as hard as the domestic firms, with Korean automakers registering a 26.1 percent rise in the month and Japanese companies a 3.4 percent increase.

German luxury carmaker BMW also saw its French sales edge up in August by 4.1 percent.

But the overall drop -- the largest in years -- underscored the risk that French consumer spending could fall off from the high levels that have kept the country's economy outperforming many of its European neighbours in recent years.

Recent data from the Bank of France showed that French shoppers are borrowing more but having a tougher time paying back their debts.

Adam Collins, a car analyst at Schroder Salomon Smith Barney in London, said he was concerned that French consumers could rein in spending, with obvious consequences for the auto sector.

"August is always a little unrepresentative of the broader trend in France, but in this case I think the numbers speak for themselves," Collins said.

"We are not particularly optimistic about France or Germany, where the market has been suffering for a lot longer."

Separately, new car sales in Spain fell 10.4 percent year-on-year in August, according to provisional data from Spain's National Carmakers' Association ANFAC. Sales in Spain are down 8.8 percent in the first eight months of 200