Europe's Car Makers See Light at the End of the Tunnel -- Update
April 26 2017 - 10:35AM
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 soon join the U.S. in returning to its precrisis record for
new vehicle sales.
Fiat Chrysler Automobiles NV's reported results that beat
expectations, leading to a jump in the company's stock.
Daimler AG, the maker of Mercedes-Benz cars, said 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.
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 precrisis high set in 2007. That compares with the U.S.
where auto makers sold 17.6 million vehicles in 2016, a second
straight yearly record.
The European recovery has been uneven with some countries,
including Germany and the U.K., passing their prerecession highs
for car sales. Those on the southern edge of the continent, in
particular Italy, haven't made it yet.
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 EU 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.
Fiat Chrysler reported an 11% increase in first-quarter profit
as revenue advanced and the Italian-American car maker improved
results in its two main markets. In the U.S., profit inched up 1%
even as the company sold 6% fewer vehicles. The results cheered
investors who had been expecting worse after Chief Executive Sergio
Marchionne said earlier this month that the first quarter was
"difficult." The car maker also confirmed its ambitious full-year
targets.
The company's shares were 6.3% higher at EUR10.31 in Milan
trading, the best performing auto stock in Europe.
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.
Write to Eric Sylvers at eric.sylvers@wsj.com
(END) Dow Jones Newswires
April 26, 2017 10:20 ET (14:20 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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