French new Car Sales Down in 2003

PARIS, Jan 2, 2004; Rebecca Harrison writing for Reuters reported that French new car sales tumbled 6.3 percent last year as slack consumer morale weighed on Europe's worst-hit major auto market, and analysts say a real recovery is still some way off.

The French car manufacturers' association CCFA said in a statement on Friday sales edged up 0.6 percent in December to 160,463 units, but fell 3.9 percent on a comparable business days basis.

This brought sales for the year to 2.01 million units, a fall of 6.3 percent as high unemployment, poor consumer confidence and a summer heat wave kept French motorists from splashing out on big-spend items like cars.

Most analysts are forecasting a flat to slightly improved car market in 2004, with a poor start to the year as recovery remains elusive.

"The December figures aren't so bad, although we'll have to see whether the manufacturers were propping up demand with discounts," said Patrice Solaro from Julius Baer. "It's still too early to call a recovery -- we expect zero growth next year and a dismal first quarter."

Market research group the Observatoire de l'Automobile forecast last month that sales in France would rise around one percent in 2004.

FRENCH DUO LOSE GROUND

Domestic duo Renault and PSA saw their combined market share dip to 59.6 percent from 60.0 percent as foreign manufacturers, including Japanese firms Toyota (Tokyo:7203.T - News) and Nissan (Tokyo:7201.T - News) and U.S. giant GM , wooed French motorists.

France's biggest carmaker PSA Peugeot Citroen saw sales of its cars slide 18.6 percent in December and 9.7 percent for the year due to tough competition from rivals.

Sales of Renault cars climbed four percent in December thanks to hit new models, but failed to offset slack demand earlier in the year, meaning 2003 sales fell 5.8 percent.

Shares in PSA edged up 0.32 percent while Renault gained 0.46 percent by 1153 GMT, slightly lagging the European DJ Stoxx Autos index (Zurich:^SXAP - News).

The French market has fared worse than its counterparts in Germany and Britain, and sales in western Europe are only expected to fall between one and two percent in 2003.

The French figures were in line with expectations from both Renault, PSA and most industry analysts for an annual fall of around 6-7 percent.

The CCFA noted that the fall in 2003 followed strong growth in the French auto market over the previous four years, adding that diesel cars accounted for a larger portion of the market in 2003 at 67.4 percent compared to 63.2 percent in 2002.