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Deals Prop Up Car Sales in Europe

Scrappage incentives plans drive sales gains
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Retail car sales are beginning to show year-on-year gains in Europe—at least where government sales incentives are in play.

Year-to-date volumes are still down by double digits among the region’s largest markets because of springtime lockdowns to curb the coronavirus pandemic. Whether July results indicate a reviving market or just the effect of big discounting isn’t clear.

France

Car sales in which advanced 1% in June, climbed 4% to 179,000 units last month, according to CCFA. The industry trade group credits a government scrappage program that pays as much as $5,900 to consumers to swap an old car for one that meets current Euro 6 emission standards.

France’s 2-month-old campaign, which supported the sale of about 200,000 vehicles, ended last week. A new version continues the range of payouts but limits them to buyers with lower personal incomes than before.

Spain

In Spain, year-on-year sales in July marked the first monthly gain all year. Sales last month rose 1% to 177,900 units, says trade group ANFAC, largely because of a $4.4 billion scrappage plan that took effect in mid-June.

Last month’s deliveries in Spain were buoyed by a 7% gain in sales to individual buyers. The gain softened a 15% drop in sales to rental fleets. Deliveries to other companies were flat.

Italy

The turnaround hasn’t yet begun in Italy, where a scrappage plan didn’t start until this week. The country’s transport ministry says July sales totaled 136,500 units, down 11% from the same month last year.

The discount plan that began yesterday gives consumers $4,100 toward a new car when they replace an old vehicle with one that is Euro 6-compliant . More than half the total incentive is in the form of dealer discounts. Buyers can apply government incentive worth as much as $9,400 when their new car is all-electric.

Bottom Line

No surprise that hefty incentives of any kind will kindle consumer demand. But after June’s 23% drop, there’s still no telling whether there’s any life in Europe’s natural new-car market.

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