Volkswagen can ill afford a drop in sales and weaker profitability while grappling with a growing crisis that it estimates will exceed $12.3-billion in fines and repair costs.Suzanne Plunkett/Reuters
Volkswagen AG's market share in Europe declined in October, the first full month of sales since the company's emissions-cheating scandal became public.
The German manufacturer accounted for 25.2 per cent of new-car registrations in the region last month compared with 26.1 per cent a year earlier, the Brussels-based European Automobile Manufacturers' Association, or ACEA, said Tuesday in a statement. Car makers' sales across Europe rose 2.7 per cent to 1.14 million autos, slowing from a 9.8-per-cent jump in September, as demand at Volkswagen fell 0.8 per cent. "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 car maker, Europe's largest, was losing ground in the region to competitors offering a wider range of sport utility vehicles. 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 ($12.3-billion) in fines and repair costs.
Volkswagen managed to keep its market share from narrowing further by deepening discounts on vehicles. The car maker's dealers in Germany, Europe's biggest auto market, offered customers an average 11.2 per cent 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 per cent from 11.8 per cent a year earlier.
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-per-cent increase; Italian-U.S. auto maker Fiat Chrysler Automobiles NV, which sold 7.7-per-cent more vehicles amid a 70-per-cent surge at its SUV-focused Jeep brand; and Daimler AG, whose 21-per-cent jump was propelled by demand more than tripling at the Smart city-car nameplate. Daimler's Mercedes-Benz premium marque sold 11-per-cent 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 per cent in Germany, 1 per cent in France, 8.6 per cent in Italy and 5.2 per cent in Spain. Sales in Britain, which ranks second in the region, fell 1.1 per cent in October.
The British drop marked the country's first auto-sales contraction in more than 3 1/2 years, Ms. Church and Mr. 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 European sales decline was the company's first since May. Its 10-month market share narrowed 0.4 percentage points to 25 per cent as the group's 6.5-per-cent sales growth in the period lagged the industrywide 8.2-per-cent 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 fuelled by gasoline. Diesel cars make up more than half of the passenger autos sold in Europe.