Europe's Car Makers See Light at the End of the Tunnel
April 26 2017 - 7:56AM
Dow Jones News
By Eric Sylvers
The European car industry received a confidence boost Wednesday
as the continent's manufacturers continued to post a raft of
positive first-quarter results, raising expectations that the
region will book a strong year that brings it closer to its
pre-crisis record for new vehicle sales.
Daimler AG, the maker of Mercedes-Benz cars, reported that
quarterly net profit had doubled as sport-utility vehicle sales
surged and raised its forecasts for the year. Peugeot, which during
the first quarter reached an agreement to buy General Motors Co.'s
European business, reported a 4.9% rise in revenue that beat
expectations.
Wednesday's results come after strong showings last week from
Volkswagen AG and BMW AG.
The first-quarter results and upbeat forecasts will help to
appease an industry that has been on edge despite recent signs of
improvement. Enthusiasm for incremental advances in car sales seen
since early 2016 were tempered by political upheaval such as the
U.K's vote to leave the European Union and terror attacks across
the region.
So far, car sales in the U.K.--the region's second-biggest
market after Germany--have remained buoyant despite the Brexit vote
and the small price rises that several companies introduced to help
offset the fall in the value of the pound. The terrorist attacks
didn't significantly hurt consumer confidence on the continent,
while in the Netherlands the far-right populist party failed to
make inroads and in France, a runoff in early May is expected to
elect a centrist, pro-European president.
Car makers sold 14.6 million new vehicles in the EU in 2016, the
highest number in almost a decade, yet the region has had a long
journey back from the financial crisis and volume is still about 6%
below the pre-crisis high set in 2007.
European recovery has been uneven with some countries, including
Germany and the U.K., passing their pre-recession highs for car
sales. Those on the southern edge of the continent, in particular
Italy, haven't made it yet. That compares with the U.S. where auto
makers set a second straight yearly record for vehicle sales in
2016.
European car sales had their best March ever and rose 8.4% in
the first quarter, well ahead of projections made early in the year
by both forecasters and the region's industry lobby, which is still
forecasting growth of just 1% this year, a number in line with most
analysts.
Daimler's net profit in the three months to the end of March
doubled to EUR2.7 billion ($2.94 billion). The company said revenue
and operating profit would "increase significantly" this year.
Peugeot, official known as Group PSA, said revenue in the first
quarter rose to EUR13.6 billion as sales of higher-margin new cars
helped offset currency pressure. The company said it expects the
automotive market to grow by about 1% in Europe this year.
Paris-based Peugeot is focusing on Europe with its acquisition
of GM unit Opel, which will boost auto sales there by 50%, making
it the region's second-largest car maker after Volkswagen.
Fiat Chrysler Automobiles NV reports later Wednesday and is
expected to report that European results helped offset a softening
in the U.S.
Write to Eric Sylvers at eric.sylvers@wsj.com
(END) Dow Jones Newswires
April 26, 2017 07:41 ET (11:41 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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