European car sales rise, but it is a 'dead cat bounce'?

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European car sales rise, but it is a 'dead cat bounce'?

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For the first time in a year and a half, car sales in Europe rose, but without an almost 15 percent increase in Britain they would have been negative again.

Indeed the rebound in April was weak – one analyst called it a “dead cat bounce” – and was linked to several one-off factors which suggests we are not looking at a sustained recovery.

Last year demand for new cars in recession-hit Europe fell to its lowest in 17 years, falling 16.3 percent from 2011.

April saw a 1.7 percent year-on-year rise in the European Union, though two extra sales days in the month this year helped.

Renault managed a five percent increase, but only because of a big jump in sales of its low priced Dacia brand which were up 27.6 percent.

Generally French and Italian mass-market manufacturers continue to suffer from their heavy reliance on car buyers in southern Europe.

“Smaller, cheap cars at the bottom of the market are selling well, as are high-end luxury vehicles. But the middle of the market, served by the likes of Fiat, Renault and PSA (Peugeot Citroen), continues to be very soft and weak,” said Peter Wells, head of the centre for auto industry research at Cardiff University in Wales.

For the first four months of this year, the European Automobile Manufacturers’ Association said sales volumes were down seven percent from the same period in 2012

Industry bosses have called it a challenging start to the year as eurozone unemployment reached record highs, credit dried up and households focused on repaying debt.

Germany is seen by industry watchers as the best future market for growth.

“It’s a bit like the ‘dead cat bounce’ because car sales have been so low for so long they may have reached their low point, but I’m wary about calling this a turning point because consumers in most of the eurozone remain under pressure,” said Howard Archer, chief European economist at consultancy IHS.

“Germany is the best market to see future upticks because the fundamentals for consumers there, such as high employment and wage growth, are better than elsewhere.”