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Scrapping Schemes End 14 Months Downturn Rally of Auto Sales in Europe
Aug 03, 2009

As the governments scrapping schemes have started showing effects, new car registrations in Europe surged 2.4% year-on-year in June 2009.

According to the European Automobile Manufacturers Association (ACEA), new car registrations in Europe rose for the first time in last 14 months to 2.4% year-on-year during June 2009, taking the total volume sales to 1,461,859 vehicles, as reported by The Wall Street Journal.

Majority of big car manufacturers witnessed upsurge in their sales during June 2009, with Europe's top seller Volkswagen AG recorded an increase of 9.5%, while Fiat SpA of Italy gained 11.7% on account of strong demand for its relatively less expensive small cars.  Sales of PSA Peugeot Citroen, Ford Motor Co. and Renault soared 4.4%, 2.2% and 3.4% respectively in June 2009.

Scrapping subsidies and incentives given by the governments have fueled up the demand for the automobile after it was severely struck by the worst financial crisis in several decades. For instance, the government of Germany is offering 2,500 Euros ($3,500) to consumers, leading to strong thrust to the demand for smaller model cars. This government package accelerated auto sales by 40.5% in June 2009 over June 2008 in Germany (Europe's biggest market) and by 26% in H1 2009 against the corresponding period last year.

Besides, similar programs boosted vehicle sales in two other countries - Italy (12.4%) and France (7%) year-on-year. However, there was no impact of scrapping schemes in some countries; for instance - sales tumble 15.9% in Spain and 15.7% in Britain.

However, the overall registrations in Europe dropped by 11% in the first half of 2009 from the same period a year ago to reach 7.43 Million vehicles. In line with Europe, Western Europe's registration escalated 4.6% to 1.38 Million in June 2009, while the registrations in the period January-June 2009 slumped 9.8% to 6.96 Million passenger cars.

According to a Research Analyst at RNCOS, "Incentives schemes are helping automobile players to improve their sales of small cars, but the overall demand for automobiles is still very low. The sales of luxury cars have not been reviving by these schemes and are expected to decline next year when the governments abolish the scrapping schemes."

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