Tuesday September 1, 06:20 PM

Govt schemes boost Europe August car sales

By Jason Webb and Helen Massy-Beresford

MADRID/PARIS (Reuters) - Car sales data from Europe benefited from scrapping incentives in August, but as concerns grow about the future of the market when the incentives run out, France said it might extend its scheme beyond year-end.

French car sales rose 7 percent year-on-year in August to 110,607 units, automakers' association CCFA said. But sales of light utility vehicles, many of which are not eligible for the scrapping bonuses, fell 24.9 percent.

Many governments have introduced bonus schemes to encourage drivers to trade in old cars for new, less-polluting models, and carmakers have called for a gradual phasing out to prevent sales falling off a cliff when the schemes end.

Budget Minister Eric Woerth said on Tuesday that the government incentive scheme, which offers 1,000 euros to eligible buyers, could be extended beyond December, when it is due to expire.

The minister in charge of implementing the government's economic stimulus package, Patrick Devedjian, said last week the scheme had generated the sale of 330,000 vehicles.

"We'll see a rush of drivers visiting dealerships in November and December, wanting to take advantage of the scrapping bonus at its highest level," said Xerfi analyst Guillaume Mouren in a research note.

But "vehicles sold at the end of this year won't be sold next year," he added. "If a gradual end to the scrapping incentive will allow for a limited fall in the French market, we should still expect a drop in sales of over 10 percent in 2010," he added.

France's biggest carmaker, PSA Peugeot Citroen saw a 17.3 percent increase in group sales, with the Peugeot brand up 15.8 percent and Citroen gaining 19.1 percent. Renault group sales rose 11.1 percent, with the Dacia brand -- which includes the low-cost Logan -- up 62.1 percent and Renault brand sales rising 3.7 percent.

Ford brand sales rose 33 percent, but Fiat's plunged 18.8 percent.

SPANISH SALES FLAT

Spanish car sales halted their decline after 16 straight monthly falls, automakers' association ANFAC said.

Sales were still down about 40 percent compared with the typical August sales figures recorded before the recession began, however, underlining the depth of the crisis engulfing the industry.

New car registrations totalled 58,510 units in August, just 20 fewer than in August 2008. Spain launched a 200 million euro subsidy plan in May, and ANFAC said it expected it to boost 2009 sales by 100,000 units.

In Japan, sales fell 0.5 percent year-on-year, but were up 2.3 percent when excluding 660 cc mini-vehicles, marking the first gain in 13 months, the Japan Automobile Dealers Association said.

South Korea's automakers revealed mixed fortunes, with Hyundai Motor sales climbing 25 percent, Kia Motors Corp's rising 4.1 percent, but GM Daewoo's dropping 22.9 percent.

And India's top carmaker, Maruti Suzuki, which is 54.2 percent owned by Japan's Suzuki, posted a 42 percent leap in total sales in August.

Italian car sales figures are due for release at 1600 GMT, with a 9 percent year-on-year increase expected, Il Giornale reported, citing unnamed car manufacturers.

U.S. automotive sales are due at the same time, and are expected to reach a 20 month high thanks to government incentives.

Car sales for Germany, Europe's biggest market, are due on Wednesday.

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