European Car Sales Surge to Record High 

(Bloomberg) --

Europe emerged as a bright spot for the embattled global auto industry after car sales jumped to a record in December, but it could be short-lived.

Fueled by an end-of-the-year buying frenzy ahead of regulation changes, car registrations rose 21% to 1.26 million vehicles, the European Automobile Manufacturers’ Association said on Thursday. The late surge helped offset a weak start to 2019 and push full-year sales 1.2% higher, reversing a slight drop in 2018.

Europe’s growth contrasts with weak demand in the world’s two biggest car markets. Car sales in China fell 3.6% in December, the 18th decline in the past 19 months as a slowing economy and trade tensions unsettle consumers. Dealers in the U.S. offered record discounts to bolster sales as demand slowed at the end of 2019. The two countries signed the first phase of broader trade pact, which could ease sentiment.

The “exceptional” gain in Europe last month was fueled by a 28% increase in France and a more than doubling in Sweden, where governments changed emissions-based taxes on new cars starting in 2020, the lobbying group said. Sales also more than doubled in the Netherlands ahead of an increase to 8% from 4% in the tax rate for electric company cars. By pulling forward buying, the changes could sap demand heading into 2020.

The latest European figures show how the regulatory environment is creating more volatility for the industry, as governments push policies aimed at lowering carbon emissions. This year ushered in stiff European Union penalties for manufacturers on the sale of the most polluting models, while individual countries including Germany put in place subsidies toward the purchase of electric cars.

The big December gain was also due to a low figure a year ago, when sales were crimped in the last months of 2018 by another set of rule changes -- these affecting the way emissions are measured.

Europe’s carmakers have held up relatively well. Volkswagen AG’s global vehicle deliveries edged higher last year as the world’s largest automaker eked out a small gain in China and improved results in Europe and South America.

There have also been bright spots in the premium segment. Volkswagen’s Porsche brand shrugged off the industry malaise to post record deliveries in 2019 and predicted the Taycan, its first all-electric model, will foster further growth in 2020. BMW AG, Daimler AG’s Mercedes-Benz and VW’s Audi also reported higher sales last year.

Still, the costly transition to electric cars is straining the industry, with auto manufacturers announcing plans to eliminate tens of thousands of jobs, according to data compiled by Bloomberg News. Opel, the German brand of PSA Group, said on Jan. 14 it will cut as many as 4,100 positions.

To contact the reporter on this story: Oliver Sachgau in Munich at osachgau@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net, Tara Patel, Chris Reiter

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