French New Car Registrations Slump Again

By David Pearson, Matthew Curtin and Inti Landauro

PARIS--France's car market shrank sharply again in June, bringing the decline in registrations of new cars to 9% for the first half the year, with the country's auto makers' association warning of only a slight improvement by the end of the year, contrary to earlier expectations.

The Comite des Constructeurs Francais d'Automobiles said the French car market will likely contract 8% this year, to its lowest level since 1997, compared with an earlier forecast of a decline of roughly half that for 2013.

The weak data underscore the pressure on Europe's mass-market car makers, most notably France's PSA Peugeot-Citroen (UG.FR), amid concerns that there is a structural or long-term decline in demand for new cars in Europe, rather than just a cyclical slump related to slack economic growth and high unemployment.

Registrations of new Peugoet and Citroen cars fell 9.5% in June, leaving them down 14% for the first half of the year, and underperforming cross-town rival Renault SA (RNO.FR), France's auto makers' association said Monday.

Peugeot has in recent months asked U.S. development partner General Motors Co. (GM) to inject more cash. The car maker has also held talks with Chinese partner Dongfeng Motor about taking a potential stake or extending an industrial alliance, according to people familiar with the matter.

New registrations at Renault, which is continuing to benefit from growth in demand for its entry-level range of Dacia no-frills cars, fell only 3.6%, though for the year to date its registrations are down 12%.

Most other manufacturers had a poor June in France, the euro zone's second biggest car market after Germany. New registrations fell 10% for Volkswagen AG (VOW.XE), Europe's biggest auto maker ahead of Peugeot, 9.5% for Ford Motor Co. (F), and 31% for GM. Like Peugeot, Ford and GM are making heavy losses at their European operations. Some Asian manufacturers had a poor month too, with Nissan Motor Co.'s registrations down 17% and the combined figure for South Korean manufacturers Hyundai Motor Co. (005380.SE) and Kia Motor Corp. (000270.SE) down 23%.

Bucking the trend was Italy's Fiat Spa (F.MI), with June registrations up 7.8% including a 20% jump for its Fiat brand. There were also gains for Toyota Motor Co. and Daimler AG (DAI.XE), with Daimler benefiting from demand for its Mercedes Benz premium cars.

Write to Inti Landauro at [e-mail], Matthew Curtin at [e-mail] and Inti Landauro at [e-mail]