PARIS/FRANKFURT: Elie Chauvin did not plan to buy a new car when he stopped by his local Hyundai showroom, but the retired builder came away with two for the price of one.
The bargain-basement offer in Nimes, France — buy an ix35 crossover utility vehicle, get an i10 mini thrown in for one euro ($1.31) — is further evidence that Europe is a car buyer’s paradise and a manufacturer’s nightmare.
“It was the offer that I noticed,” said Chauvin, 63. “I wouldn’t have changed my car otherwise. Not yet.” His message echoes confidential market research seen by Reuters; discounts by mass-market car brands jumped 17 percent from a year earlier to an average 2,518 euros per vehicle in May across Europe’s five biggest markets.
Europe’s decline in car sales is showing signs of bottoming out, even as the market shrinks for a sixth straight year to a two-decade low. But cut-throat price competition among brands and dealers threatens to kill any sense of relief for automakers struggling with excess plant capacity.
Almost all are bleeding cash in Europe, with the exception of Volkswagen and its German luxury peers. Regional losses last year came to ¤704m for Fiat and $1.8bn each for Ford and General Motors, while euro-centric PSA Peugeot Citroen posted a thumping 5 billion euro net loss.
Out of concern for brand image, many carmakers mask their price-slashing by registering some of their own vehicles to sell as used, or by offloading them to rental firms at the end of the month with a hefty mark-down.
Others, like Hyundai, are coming up with ever more imaginative discounts they can brazenly advertise to grab a bigger share of Europe’s shrinking market from weaker rivals. Many of Hyundai’s recent Spanish customers will be getting ¤2,250 back, after it pledged last month to refund one car loan instalment of up to ¤150 for each of the first 15 goals scored by the national soccer side in the Confederation Cup. “Spain scores, you win,” Hyundai’s slogan proclaimed — and the team duly notched up 15 goals in its first three games, including a 10-0 victory over Tahiti.
Toyota countered with up to ¤5,000 of extra equipment — such as alloy wheels, parking cameras and refrigerated glove boxes — all for one euro. Its Queen Car dealership in Milan, Italy, has also been giving out holidays. Optimism is growing that car sales volumes may be nearing the end of their long slide.
Ford is boosting Spanish production of its Kuga SUV by 10 percent, while Volkswagen has asked workers to cut short their summer breaks and build more Golf hatchbacks.
While June registrations fell another 6.1 percent in Western Europe, consulting firm LMC Automotive said, the seasonally adjusted rate rose from an annualised 11.55 million in May to 11.7 million, “comfortably the best result so far this year”. But any nascent recovery is threatened by the kind of discounting that convinced Elie Chauvin and millions of others to bring forward purchases they would otherwise have made later.Reuters
