Both GM’s Opel and PSA lost European market share last month as the firms mull a deal
A bumper European car market has underlined the reasons behind a prospective deal between General Motors (GM) and PSA over GM's European business.
Both companies posted weaker European sales in January than any other carmaker according to the Association of European Carmakers (ACEA). They also lost market share to Fiat Chrysler Automobiles in Europe – demand there rose 15 per cent.
The two firms confirmed earlier this week they were in talks about the possible purchase of GM's Opel, which would include Vauxhall, by PSA.
Read more: More than 8m used cars were sold last year setting new UK record
A new combined firm would speed up the ranks and overtake French rival Renault to be the second largest European car manufacturer, behind Volkswagen.
However, it has stirred up concern in both the UK and Germany over potential job losses.
Among other car firms, VW held its market share at 24.1 per cent in January compared to a year earlier and recorded 10 per cent growth in passenger registrations.
The firm has been embroiled in a diesel emissions scandal which had spawned a series of declines since the scandal was uncovered in late 2015, but more recently had been on a two-month road to recovery.
New passenger car registrations at PSA, which encompasses the Peugeot, Citroen and DS brands in the EU and the European Free Trade Association, rose 6.5 per cent in January, while GM's Opel and Vauxhall brands, rose 5.3 per cent.
Read more: Peugeot-maker PSA confirms it's in talks to buy GM's Opel
Registrations across the industry rose 10.2 per cent to 1.2m vehicles, with solid performances across the major markets. Registrations were up 10.7 per cent in Spain, 10.6 per cent in France, 10.5 per cent in Germany and 10.1 per cent in Italy.
New passenger car registrations in the EU
(Source: ACEA)
The UK passenger car market also rose up for the first month of 2017, though not to the same extent – up 2.9 per cent.
The vote to leave the European Union has thrown uncertainty on further growth, with the SMMT chief executive saying 2017 "may well be more challenging as sterling depreciation raises the price of imported goods", in terms of car sales.