European Car Sales Flatten as VW Holds Nearly 25% of Market, Shows Peugeot Need for Opel

Cars sales within the European Union rose only 2.2% in February, a shift downward in the rate of expansion compared to most of the past year. One thing has not changed over the period. Volkswagen holds almost a quarter of the market, with a share of 23%. The troubled car company has no real competition when it comes to total unit sales. PSA Group, which just bought General Motors Co.’s (NYSE: GM) Opel, held 10.7% of the market, which puts it in second place, with sales of 115,710.

February EU cars sales were just above 1 million, which makes the market smaller than the United States, where 1,333,637 cars and light trucks were sold last month. According to the European Automobile Manufacturers Association:

In February 2017, EU demand for passenger cars increased only modestly (+2.2%), especially when compared to January’s double‐digit figures. February registrations totalled 1,078,503 units. In volume terms, however, this result comes close to February 2008 levels, just before the economic crisis hit the automotive industry.

For the first two months, new passenger car registrations increased by 6.2%, totaling 2,248,040 units.

VW’s market share for the month was 23.0%, down from 23.7% in February a year ago. Overall sales fell 1% to 247,872. Weakness in its flagship brand, which fell 6.6% to 111,780, was partially offset by Audi sales, which rose 2.4% to 56,100.

PSA Group, which owns Peugeot, suffered a 3.1% drop in sales in February. It continues to struggle against two slightly smaller rivals. Renault sales rose 6.8% in February to 112,481. Fiat Chrysler Automobiles N.V. (NYSE: FCAU) sales rose 8.3% to 86,697. And at the luxury end of the market, BMW sold 52,837 and Mercedes 53,768. PSA has been flanked at the both the bottom and luxury ends of the market.

The February sales data show just how much the Opel sale will add to PSA in heft. Opel sales were down 2% to 68,796.

Critics may argue that the PSA tie-up is a combination of weak companies. However, with VW holding a large lead, a business combination is PSA’s only chance to gain real ground.