Reuters reported that French car sales deepened their monthly decline to an 18% December contraction, with Renault and Peugeot losing ground as an end of year subsidy hangover blighted demand for their smaller vehicles.

France's CCFA automakers' association said that Europe's second biggest auto market logged 187,653 car registrations, accelerating its year on year drop from November's 7.6% slide. Full year sales fell 2.1%.

Mr Francois Roudier spokesman of CCFA said that "The decline compares with an extremely high level of December 2011 sales in the last two years thanks to the scrappage withdrawal. Still, the market is showing a decline in morale."

December's YoY drop was accentuated by a sales surge at the end of 2010, when consumers rushed to showrooms before the expiry of government funded subsidies on trade ins.

The CCFA said that Paris based PSA Peugeot Citroen, Europe's second biggest automaker after Volkswagen, posted a 29% plunge in December 2011 sales. Smaller domestic rival Renault recorded a 28% drop in deliveries.

While the subsidy withdrawal hurt demand for smaller cars across the industry, French car makers also suffered from ageing models in the crucial subcompact category. The Renault Clio and Peugeot 207 are both due for updates later this year.

Fiat's French registrations fell 14% in December 2011, while VW resisted the market slide with a 15% gain, led by a 21% surge for its luxury brand, Audi. BMW's sales fell 17%.

Delivery van sales, whose recovery from the last economic crisis was unsubsidized and began later, posted a 1.6% gain for December to end the year 2.8% higher. Total light vehicle sales, combining cars and commercial vans, fell 15% for the month and were down 1.3% in 2011.

(Sourced from www.reuters.com)