European car sales down 5.2%

EUROPEAN UNION car sales are still sagging despite the return of modest economic growth.

For the first eight months of the year, passenger car sales were down 5.2% to 7.84 million compared with the same period last year, the European Auto Manufacturers' Association said - the lowest January-August figure since the group started keeping records in 1990.

New car registrations in August fell five per cent from a year ago to 653,872.

The economy in the 28-country EU grew 0.4% in the second quarter, ending a recession, but the unemployment rate remains high at 11%, making many consumers unable or afraid to buy a new car.

Countries hit by the eurozone debt crisis, such as Greece and Spain, face even higher jobless rates that have hurt sales of moderately-priced vehicles especially hard. Luxury car-makers are doing better.

The August downturn was distributed across Europe's biggest markets.

Germany saw a 5.5% drop, despite a stronger economy than in other members of the 17-county eurozone. Registrations fell 10.5% in France, 18.3% in Spain, and 6.6% in Italy.

Britain's was the only major market to expand, rising 10.5%.

Among the major car-makers, Germany's Volkswagen Group was down 11.2% in August while France's PSA Peugeot Citroen slipped 17.3%. Renault Group rose six per cent and General Motors was up 0.5% as a large jump in sales of Chevrolet-branded vehicles made up for a 3.4% fall in sales of its main European Opel and Vauxhall brands. Ford was down 1.5%.

Luxury brands performed better, with Mercedes up 8.9%, excluding its compact Smart city car, and BMW rose 9.5%, excluding its Mini brand. Audi luxury brand, a chief competitor for Mercedes and BMW, was down 5.6%.

The biggest market share over the first eight months remained with Volkswagen Group, including the company's other brands such as Audi, Seat and Skoda, with 24.9%, up slightly from 24.8%.

Global car executives expressed caution about the future in interviews at the Frankfurt Auto Show last week. They said the European market might have reached the bottom but do not see any significant increase in demand this year.

The European market contrasts with a rebound in the United States, where figures show that sales are on track to reach 16 million vehicles a year - the level before the recession. European annual sales were 15.6 million in 2007 but are heading for just under 12 million for all of this year.

The car association also issued figures for July, which showed a five per cent increase over the previous year.

July had one more working day than the previous July, while August had one fewer. In July, the only major market to shrink was Italy, which was down 1.6%.

The figures exclude Croatia, which joined the EU on July 1.

By Press Association reporters