French handouts refuel car market: Government incentive scheme to scrap old bangers brings buyers back to the motor showrooms

A FRENCH government scheme to persuade people to scrap old bangers has kick-started the car market.

Figures released yesterday showed that 188,600 cars were sold in March, 14.3 per cent more than a year before. Sales for the first three months of the year were 12.5 per cent up, following a 20 per cent drop in the last quarter of 1993.

The French government became alarmed that car sales were continuing to slip at the end of last year, even though they were starting to level out in other Continental markets. Only 1.72 million cars were bought in 1993, compared with 2.105 million the year before.

The government announced a scheme, to be introduced on 4 February, under which anyone trading in a car more than 10 years old or a new one would be given Fr5,000 ( pounds 610). Greece launched a similar programme in 1992.

The manufacturers then launched their own schemes, which broadly matched the state incentive, offering a further Fr3,000- Fr10,000, depending on the model bought. While the government offer lasts until June next year, the car companies gave a deadline of 31 March, which they advertised heavily. Sales rose 8.2 per cent in February, before jumping last month.

According to Arthur Maher, car analyst at DRI/McGraw-Hill in London, 70,000 of the March sales involved trading in old cars, including the rattly Citroen 2CVs and Renault 4s that are part of the Gallic landscape.

The optimists in the industry believe that the scheme will create sufficient momentum to start overall sales rolling again, leading to total sales for the year of 1.95 million.

Mr Maher is more cautious. 'The scheme has done the business for March, but we will have to see how April looks,' he said. DRI believes that sales for the year will be 1.88 million, 9.3 per cent up on 1993.

The sales rises reflected both the generosity of the scrapping schemes and the strength of car ranges. The big winner was Citroen, whose sales jumped 44.2 per cent in the first three months of this year. Its AX and Xantia models have both been selling exceptionally well. This performance pushed Peugeot Citroen ahead of Renault, whose sales rose by only 4.3 per cent in the same period.

Sweden also registered a strong recovery in car sales during March, although analysts said this was part of a more conventional cyclical recovery.

The market grew by 22.4 per cent, giving a rise of 20.9 per cent in the first quarter. Mr Maher said Scandinavian countries were now clearly following the UK out of the car-buying slump.

Ford of Europe's chairman, Jacques Nasser, said last week that he was cautiously optimistic about European sales.

(Photograph omitted)