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EU Car Sales: How Low Can You Go ?
( From ​ ACEA , CNBC )
The Situation

​​In June, new passenger car registrations totaled 1,134,042 units, declining by 5.6% compared to the same month last year. In the first half year of 2013, 6,204,990 new cars were registered in the EU, or 6.6% less than in the first six months of 2012.

​​Car sales for June in the European Union fell to their lowest point since 1996, prompting analysts to warn the data could get worse before it gets better.

In Germany, the market contracted by 8.1 percent, in France by 11.2 percent and in Spain, by 4.9 percent. The decline comes after European car sales experienced an optimistic bounce in April before falling to a two decade low the following month.

Shares of Fiat, Peugeot Citroen, VW Group and General Motors, which all experienced sales declines in June, traded lower on Tuesday.
Ernst and Young's Fuss told CNBC that luxury carmakers, which almost "defied the recession" during the first half of 2012, have also suffered declines this year.

"Automakers' margins face continued pressure as they are forced to prop up sales through self-registrations, record levels of discounts and other freebies such as interest-free car financing and free insurance," Fuss said.

A number of car manufacturers have announced the closure of car plants, including Peugeot Citroen which said it would close a plant in France in 2014with the loss of 8,000 jobs. That decision prompted drawn out protests from the workers.

Da Silva said, however, that rather than shut down factories as a result of fewer car sales, many plants were now operating at a lower capacity. Figures from consultancy IHS in June showed that more than half of Europe's 160 car plants operated below 70 percent of their total capacity in the first quarter of this year.

"Reducing capacity at plants is a less visible way of closing plants. Normally a plant would have two or three lines producing cars, now there are only one or two."

In June, the UK was the only major market to expand (+13.4%), while the Spanish slipped by 0.7% and the German (-4.7%), Italian (-5.5%) and French (-8.4%) contracted. Total new registrations in the EU amounted to 1,134,042 units, or the lowest level recorded
​since 1996.

​​From January to June, except for the UK which expanded by 10.0%, all other major markets faced a downturn ranging from -4.9% in Spain to -8.1% in Germany, -10.3% in Italy and -11.2% in France. Overall, demand for new cars reached 6,204,990 units in the first semester of this year and decreased by 6.6% compared to the first half year of 2012.