French Car Market Slows Down in April Due to Incentives Cut

A cut in the government incentives in France slowed down growth in April, while Spanish car sales rose, with scrapping schemes continuing to fuel demand. However, the French increase in van sales, which are not affected by the scrapping bonus, shows that businesses are ready to invest again as economic recovery gathers pace.

In France, where scrapping incentives were reduced at the start of 2010 but continuing at a lower rate, passenger car registrations rose 1.9 percent in April to 191,000 units, compared to a 13 percent growth in March.

"Here we see the impact of the gradual reduction in the scrapping incentive," said a spokesman for industry association, the CCFA, quoted by Reuters. "Despite this, the reports we have from carmakers also show that levels of orders for new models and medium-sized models are good, which means that the market is still holding up despite the reduction in aid," added the spokesman.

France's biggest carmaker, PSA Peugeot Citroen, saw sales of its Peugeot brand cars rise 24.2 percent in April year-on-year. Citroen brand cars were down 8.6 percent after a particularly good performance in April 2009, leaving an overall 7.3 percent increase for the group.

Renault saw group sales growing 17.2 percent, with Renault brand cars up 9 percent and sales of Dacia models more than double. Renault has forecast a 10 percent drop in the European car market as a whole for 2010.

Spain, meanwhile, where scrapping incentives are in place until the end of June, with calls for them to be extended, showed a 39.3 percent increase in car sales to 93,600 units in April.