French automakers report weak sales in Q1 image

Peugeot Citroen said Wednesday it sales slumped in the first quarter, while Renault says a worse-than-anticipated slump in car markets in France and across Europe caused overall sales to fall 8.6 percent in Q1.

Peugeot Citroen, the Paris-based carmaker says it made (EURO) 14.3 billion ($18.82 billion) in sales in the first quarter, down 7 percent from a year earlier. Renault reported first-quarter revenue of €9.54 billion, in line with analysts’ estimates. Revenue of the company’s automotive division fell 9.6% year-over-year.

First-quarter sales for the two French automakers also showed steep declines in their key French market compared with a strong period a year ago.

“The competitive environment remained difficult during the quarter, with pricing pressure similar to the last quarter of 2011, and markets in southern Europe worsened considerably,” Peugeot Citroen said.
“This environment should last throughout the first half of the year.”

The company is trying to reduce its dependence on Europe, which it sees remaining sluggish, through a push into China and an alliance with U.S. automaker General Motors (GM.N) designed eventually to cut $2 billion of the car makers’ annual costs.

However, motor industry analysts have reacted sceptically to the announced alliance between GM and PSA Peugeot Citroen.

“Two wrongs don’t make a right”. “PSA and Opel can’t restructure independently. We see no reason why putting PSA and Opel together would speed up the process of plant closures, as both have excess capacity.”

On the same time, Renault said it expects the European market to be down by about 5 percent over the full year, and by about 10 percent in France.

Registrations in the 27-member European Union plus Switzerland, Norway and Iceland fell 6.6% from a year earlier to 1.5 million vehicles, the lowest figure for March since 1998, according to the European Automobile Manufacturers’ Association. First-quarter sales dropped 7.3% to 3.43 million vehicles.