PARIS, Aug 1 (Reuter) - Sales figures released on Friday showed France's
car industry stood its ground at home in July, providing fresh evidence
that the sector outlook is improving.
Industry analysts are beginning to discern a rebound in the French
automotive sector following a 20 percent fall this year in car sales and
the painful closure of a Renault assembly plant in Vilvoorde, Belgium.
Many analysts who had given up hope that either of the two French car
makers would turn in a profit in 1997 are drawing encouragement from a
number of trends seen in recent sales reports.
PSA Peugeot Citroen said this week that first-half sales had risen 6.3
percent to 94.64 billion francs, bolstered by a 21 percent surge in vehicle
sales in Europe excluding France.
A 28 percent increase in sales of light commercial vehicles, led by the new
Citroen Berlingo and Peugeot Partner models, made PSA the clear leader in
the segment, with an 18 percent share of the market.
Group car sales in Europe excluding France rose nine percent, outpacing the
industry average.
Renault fared even better. "In Europe outside France, sales of Renault
passenger cars expanded by 13 percent, or twice as fast as the six percent
growth in the overall market," the company said in its half-year sales
report.
Renault's market share in Britain -- where it is the leading importer --
increased to 7.3 percent from 6.5 percent, helping it to reap the benefits
of sterling's 16.5 percent appreciation against the franc this year.
It is also the leading importer in Germany, where its market share rose to
6.2 percent from 5.5 percent.
Renault's strong performance reflects the success of the Megane mid-sized
car -- notably the phenomenally popular minivan-styled Scenic version --
which is the top selling car in France and fifth in Europe.
"We were the only major European manufacturer to show a sales increase in
July," a Renault spokesman said.
Renault car sales rose 4.1 percent, compared with a 7.6 percent drop for
the Peugeot group and an 18.5 percent fall for foreign manufacturers.
The French manufacturers, which are major exporters to Italy and Spain,
will also benefit from state car buying incentives in those markets. Sales
in the two countries rose 31.3 percent and 10.5 percent respectively during
the first half of 1997.
"Improving markets, better product drive, fortuitous exchange rate
movements and new management influences are some of the ingredients which
we think will remove Renault and Peugeot from Europe's automotive 'critical
list'," Salomon Brothers analyst John Lawson wrote in a report in which he
raised his estimates for both groups.
JP Morgan recently raised its recommendation on Renault to buy.
Financial consultancy Jacques Chahine Finance Natexis, Natwest, Credit
Lyonnais and Oddo have all raised their earnings estimates for Renault. It
said the consensus for Renault is still for a loss of 234 million francs,
compared with a 5.25 billion loss for 1996 following a 3.91 billion francs
in restructuring charges.
"We've been through the worst with Renault," said Societe Generale analyst
Philippe Barrier.
Renault's stock hit a year high last week, climbing above the 1994
privatisation price for the first time in 31 months and providing Sweden AB
Volvo a good opportunity to unload its 11.38 percent stake, a vestige from
a failed alliance.
Brokerage Cheuvreux de Virieu raised its estimates for the Peugeot group
this week, forecasting a profit instead of a loss as previously, and added
the stock to its select list.
According to Jacques Chahine Finance, the consensus estimate is for a 553
million franc profit, compared with a 734 million profit in 1996.
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PARIS, Aug 1 (Reuter) - Car sales in France fell 9.7 percent in July, the
seventh consecutive monthly fall from inflated 1996 levels, but Renault
sales advanced against the trend, the French carmakers' committee CCFA said
on Friday.
CCFA said new car sales fell to 211,747 units from 234,474 in July 1996,
when demand was fuelled by a year-long state car buying incentive scheme.
Correcting for the different number of business days, the fall was just 5.6
percent, it said in a statement.
PSA Peugeot Citroen car sales in France fell 7.6 percent, but Renault car
sales rose 4.1 percent. The Megane, Clio and Twingo models were the three
best sellers in France last month, a Renault spokesman said.
The Megane five-car family, which includes the hugely popular
minivan-styled Scenic, is France's top seller this year.
The only other sales gain last month was registered by the Japanese, whose
combined sales in France rose 1.3 percent. The biggest losers in the French
market in July were Fiat , whose car sales in France fell 40 percent, and
Volvo, whose sales dropped 29.5 percent.
The biggest losers in the French market in July were Fiat , whose car sales
in France fell 40 percent, and Volvo , whose sales dropped 29.5 percent.
The French carmakers, which had been losing ground on their home market,
held 57.6 percent of the market in July, compared with 55.5 percent for the
January-July period.
For the first seven months of the year, new car sales were down 21.1
percent on the year-ago period at 996,265 units.
French car manufacturers and the CCFA said last month they expected a 16
percent drop for the year in the French market, which has been weak since
the expiry last September of the new-cars-for-old rebates.
The industry does not expect a reversal in the trend before November, when
the year-over-year comparison will no longer be distorted by the rebates.
But the July sales numbers marked a vast improvement over June's 30.7
percent plunge.
"The figures are very good. This is the first sign that we're getting back
to normality," said Salomon Brothers car analyst John Lawson.
"The sales at an annualised rate were 1.95 million, compared with 1.3
million in June, and 1.6 million for the first half. If this rate is
sustained, it would signify a substantial improvement in second half
volumes," he said.
Shares in French car companies fell on Friday on profit-taking following
recent gains to year highs. PSA Peugeot Citroen's stock was 0.84 percent
lower at 710 francs, while Renault shares dropped 1.28 percent.
Taking advantage of the stock price, Swedish carmaker AB Volvo said on
Thursday that it had sold its 11.38 percent stake in Renault, the remnant
of a failed alliance, to Union Bank of Switzerland for $740 million.