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Europe car sales rise first time since 2007 on replacements

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European car sales in 2014 rose for the first time in seven years on demand for low-cost autos from Renault SA and Volkswagen AG.

[MUNICH] European car sales in 2014 rose for the first time in seven years on demand for low-cost autos from Renault SA and Volkswagen AG. The gradual revival from a two- decade low is set to continue in 2015 as buyers replace aging vehicles.

Registrations rose 5.4 per cent to 13 million cars, the European Automobile Manufacturers' Association, or ACEA, said today. That was at the upper end of industry estimates that ranged from PSA Peugeot Citroen Chief Executive Officer Carlos Tavares's prediction of a 2 per cent increase to Renault CEO Carlos Ghosn's 6 per cent forecast.

Gains last year were pushed by Renault's discount Dacia brand and VW's value-oriented Seat and Skoda marques. Amid signs that economic expansion in euro countries was stalling, automakers widened price cuts in the final months last year to stimulate demand.

"The European car market has lifted from the lows but it's only slowly recovering from crisis levels," Peter Fuss, a partner at consulting company Ernst & Young's German unit, said in an e-mailed report. The main drivers for last year's gains were "high discounts, cheap financing, government-subsidized schemes for buying new cars and a number of new models."

December sales rose 4.9 per cent from a year earlier to 997,238 vehicles. Among the top 10 carmakers selling vehicles in Europe, BMW AG, Fiat Chrysler Automobiles NV, Daimler AG and Nissan Motor Co exceeded that growth rate.

Top Markets All five of Europe's largest auto markets expanded last year, with increases of 18 per cent in Spain, 9.3 per cent in the UK, 4.2 per cent in Italy, 2.9 per cent in Germany and 0.3 per cent in France.

The ACEA's figures comprise statistics from the 28 European Union countries, excluding Malta, as well as Switzerland, Norway and Iceland. December was the 16th consecutive month of growth, the longest stretch of gains since the association began compiling registration figures in 1990.

The German carmaker association VDA expects western European sales gains in 2015 to slow by half to 2 per cent as Germany, France and Italy are set for only modest increases and volume in the U.K. returns to levels from before the global recession that began in 2008. Renault's Ghosn said in December that Europe's car market this year may be "volatile," with growth rates hinging on economic and monetary policies.

Russian Contraction Sales gains in the main part of Europe next year would contrast with an expected auto-market contraction in Russia, where the economy is sliding into a recession. Deliveries in the country fell 10 per cent to 2.49 million vehicles last year, and the decline this year may accelerate to 24 per cent, the Association of European Businesses in Russia estimated yesterday.

Renault, based in the Paris suburb of Boulogne-Billancourt, sold 13 per cent more cars in Europe in 2014 as the Duster sport- utility vehicle and Sandero hatchback helped Dacia boost registrations 23 per cent and a new version of the Captur urban crossover led to 9.1 per cent growth at the namesake brand.

European sales at Wolfsburg, Germany-based Volkswagen, the region's biggest carmaker, gained 7 per cent last year, with Skoda's Rapid sedan and wagon and Yeti sport-utility vehicle and a revamped Leon vehicle line at Seat boosting demand at both nameplates by 14 per cent. The main VW brand sold 4.3 per cent more cars, while Audi, the world's second-biggest maker of luxury cars, reported a 4.5 per cent increase.

Peugeot's Gains Peugeot, Europe's second-biggest carmaker, posted a 3.7 per cent sales increase in the region. Growth was bolstered by the Peugeot nameplate's 308 hatchback and 2008 and 3008 crossovers and the Citroen marque's C4 Cactus SUV.

General Motors Co's European brands Opel and Vauxhall sold 7.3 per cent more cars in the region, helped by the Adam city car and Mokka compact SUV. Group registrations fell 4.6 per cent as Detroit-based GM withdrew the Chevrolet nameplate from the market.

European group sales at Munich-based BMW increased 4.9 per cent. The namesake brand, the world's largest luxury-car manufacturer, won 5.5 per cent more buyers as it added the 4- Series coupe, i8 plug-in hybrid sports car and van-like 2-Series Active Tourer to its line-up. The Mini division, which offered an updated hatchback toward the end of the year, posted a 2.2 per cent increase.

BMW ranked sixth in industrywide deliveries last year in Europe to remain ahead of Fiat Chrysler, the company created from the merger of Italian manufacturer Fiat and US auto producer Chrysler. The London-based carmaker boosted sales in the region 3.5 per cent as the Renegade compact SUV propelled a 70 per cent surge at the Jeep brand.

In addition to Renault, carmakers posting European sales gains exceeding 10 per cent last year included Japanese manufacturers Nissan, Mazda Motor Corp and Mitsubishi Motor Corp as well as Swedish producer Volvo Car Group.

BLOOMBERG