France Sees Severe Decline in Car Registrations

Sales in Europe at most of the region’s mass-market car makers have been hit hard by weakening economic activity, a result of government spending cuts and tax rises designed to reduce bloated budget deficits.

Households, worried about rising unemployment and falling purchasing power, have postponed plans to buy new cars or have opted instead for cheaper previously owned vehicles.

Wednesday’s data show a 15% drop in registrations of new cars in France during December, bringing the total for the full year to 1.90 million, the lowest level since 1997.

The two brands of Renault SA suffered a 27% drop in registrations in France during December, and the total for the full year was 22% below 2011. Renault’s low-budget Dacia subsidiary has benefited from the crimped finances of French households, and its sales were down just 4.4% in December and 9.2% for the full year. Sales of the Renault brand plunged 32% in December and fell 25% over the full year.

Local rival PSA Peugeot-Citroën posted a 14% fall in its registrations in December, and its 2012 tally was down 18% from 2011.

Germany’s Volkswagen AG, whose sales in France had held up over most of 2012, suffered a 20% drop in December and was down 5.1% for the full year. Fiat SpA, meanwhile, saw a 21% drop in French sales in December, and a decline of 24% for the full year. Fiat, including its Alfa Romeo and Lancia brands, has been overtaken by South Korea’s Hyundai Motor Co., whose sales surged 33% in December and 28% over the full year. Fiat now ranks 10th in the French market.