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European car sales slide as Brexit cuts confidence
July 16, 2016
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PARIS: European car-sales growth slowed in June as the British vote on exiting the European Union weighed on business and consumer confidence.

Registrations rose 6.5 per cent from a year earlier to 1.51 million vehicles, the weakest gain since March, as demand in the UK, the region’s second-biggest market, slid 0.8 per cent. First-half sales increased 9.1 per cent to 8.09 million cars, the European Automobile Manufacturers Association (ACEA), said on Friday in a statement.

The June 23 referendum that approved the UK’s departure from the EU, known as Brexit, will probably hold back economic growth in countries using the euro, according to the European Central Bank, which has been keeping interest rates at or below zero in a stimulus drive. Prior to the vote, gauges of U.K. and euro-area economic confidence fell amid questions about how a pullout may affect companies and households. Most automotive shares have yet to fully recover from a global stock-market plunge that followed the ballot, while the pound is trading near a three-year low to the euro.

“Drastically reduced consumer confidence in the UK following the Brexit vote will probably result in a significant hit to sales,” Peter Fuss, an automotive analyst at consulting firm EY, said in a report. “Not least the German carmakers will see an impact in the form of lower exports to the UK, as cars made in Germany get more expensive for British buyers because of the weak pound.”

Renault posted the strongest European sales growth last month among the region’s 10 largest car sellers, with a 20 per cent surge propelled by the main brand’s Captur, Kadjar and Espace crossovers. Daimler ranked next with a 16 per cent jump, boosted by demand for sport utility vehicles at the Mercedes-Benz luxury nameplate. BMW AG, Daimler’s main competitor, also delivered 16 per cent more cars in the region.

European sales by market leader Volkswagen, the German manufacturer mired in a diesel emissions-test cheating scandal, rose 1 per cent in June, held back by declines at the namesake VW brand and Seat and Porsche divisions and by stagnant demand at the Audi marque. Its six-month market share narrowed to 23.8 per cent from 24.9 per cent a year earlier, remaining at the lowest since 2011. June deliveries fell at PSA Group, the owner of the Peugeot and Citroen nameplates, as well as at Ford Motor and Nissan Motor.

Meanwhile, European stocks retreated from a three-week high, led by shares in France after a deadly terror attack in Nice. In Asia, equities rose for a fifth day as Chinese economic data beat estimates amid a strong start to the corporate earnings season.

The Stoxx Europe 600 Index pared its weekly advance after the attack, which killed at least 80 and prompted France to extend a state of emergency. The MSCI Asia Pacific Index briefly exceeded its highest close of the year as the Hong Kong-listed stocks of Chinese companies extended their biggest weekly gain in four months and Taiwan’s equities entered a bull market. Japan’s Topix index capped its best week since 2009 and the yen traded near pre-Brexit levels on prospects for stimulus. The pound strengthened, oil fell and gold was poised for its first weekly loss since May.

More than $4 trillion has been added to the value of global equities since June 27 as the US economy outperforms projections and speculation mounts that policy makers will take steps to limit the fallout from the UK’s vote to leave the European Union. Laurence D. Fink, who runs the world’s largest asset manager as chief executive officer of BlackRock, said the stock rally is unlikely to be sustained without support from corporate profits. The earnings season got off to a promising start this week, with JPMorgan Chase and Alcoa exceeding estimates along with Daimler.

Bloomberg

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