French car sales up 3.1 percent in July

Government measures to boost demand for new cars supported French car sales in July with sales up 3.1 percent with 188,635 vehicles registered. Light utility vehicle registrations, which are not eligible for the scrapping incentive scheme, fell 22.1 percent year-on-year in July.

Philippe Varin, chief executive of French carmaker PSA Peugeot Citroen said last week he was worried the scrapping scheme in Germany, which has sent car sales in Europe’s biggest car market soaring, would end after the country’s elections in September.

“In the coming months, support from the scrapping scheme should run out of steam as consumers have already been strongly encouraged to buy new cars since the introduction of the eco-bonus scheme in January 2008,” analyst Guillaume Mouren said in a note about the French figures.

Assuming a gradual end to France’s scrapping scheme starting at the beginning of 2010, “that won’t prevent the French car market from falling back sharply in 2010,” said Mouren, lead automobile analyst at Paris-based consultants Xerfi.

“Indeed, drivers who wish to take advantage of the scrapping bonus at its highest level will place their orders before December 31 2009,” he said.

“In this context, we would position ourselves for a stable market in 2009 and a fall of more than 10 percent in 2010.”

Source: Reuters