Volkswagen scandal sends its market share to a five-year low

The German car giant loses ground on rivals Renault, Chrysler and Fiat

Consumers might “still take some time” to return to Volkswagen, say analysts (AFP)

Volkswagen AG’s European market share contracted by the most since December last month as the lingering effects of its emissions-cheating scandal prevented the German carmaker from taking advantage of improving sentiment among auto buyers.

Five-month sales by the Volkswagen group, including the Skoda, Seat and Audi brands, amounted to 23.9 per cent of new registrations in the region, the lowest for the period since 2011, versus 25 per cent a year earlier.

Industrywide sales jumped 9.7 per cent to 6.58 million vehicles, with Volkswagen’s growth lagging behind at 4.9 per cent, the European Automobile Manufacturers’ Association, or ACEA, said in a statement on Thursday.

Stimulus measures by the European Central Bank helped boost economic confidence in May to a four-month high in the countries that share the euro. That contributed to demand for cars at Renault SA, Fiat Chrysler Automobiles NV and BMW AG, which are luring customers with new sport utility vehicles.

In contrast, growth at Volkswagen has been held back by recalls and lawsuits that have kept the emissions-manipulation issue fresh in buyers’ minds nine months since it came to light. The manufacturer is unveiling a revamped strategy on Thursday in an effort to move beyond the scandal.

Consumers might “still take some time” to return to Volkswagen after the cheating revelation, said Klaus Breitenbach, an analyst at Baader Bank AG, who estimated the German carmaker’s sales could underperform the market for the rest of this year.

The Brussels-based ACEA compiles sales figures from the 28 European Union countries, excluding Malta, as well as Switzerland, Norway and Iceland. Registrations in May jumped 16 per cent to 1.33 million cars in the 33rd consecutive month of growth.

The increase was bolstered in part by extra sales days versus a year earlier. Demand gains in 2016 prompted the association in early June to raise its full-year EU car-market growth forecast to 5 per cent from 2 per cent.

Volkswagen’s group sales in May rose 8.8 per cent, with growth held back by an increase of less than half that pace at the namesake VW brand and a decline at the Seat unit.

The company’s market share in Europe, which narrowed in May to 24.2 per cent from 25.7 per cent a year earlier, has declined every month since the diesel-manipulation revelations in September and has been at a five-year low since the first quarter.

The German company was less aggressive than competitors at discounting in its home country last month, according to figures from trade publication Autohaus PulsSchlag.

Rebates across the market averaged 12.3 per cent in May, with Fiat offering 15.3 per cent off the list price. The VW brand’s discounts amounted to 11.8 per cent.

European registrations at French carmaker Renault surged 28 per cent last month. The company has been winning buyers with the compact Kadjar SUV, introduced last year, as well as the Captur crossover and Clio hatchback.

Fiat Chrysler’s sales in the region jumped 25 per cent, bolstered by demand for Jeep models. Luxury-vehicle maker BMW, which said a week ago that global demand last month was propelled by its X1 small SUV and van-like 2-Series, posted a 20 per cent groupwide gain in Europe.

© Bloomberg