European auto sales hit new low

FRANKFURT, Germany Car sales in Europe are still sagging despite the return of modest economic growth.

For the first eight months of the year, passenger car sales in the European Union were off 5.2 percent to 7.84 million compared with the same period last year, the European Auto Manufacturers' Association said Tuesday. That's the lowest January-August figure since the group started keeping track in 1990.

New car registrations in August fell 5 percent from a year ago to 653,872, the association said.

The economy in the 28-country EU grew 0.4 percent in the second quarter, ending a recession. But the unemployment rate remains high at 11.0 percent, making many consumers unable or afraid to buy a new car.

Governments hit by the eurozone debt crisis have cut back on spending and raised taxes to try to manage oversized debt levels, slowing their economies. The hardest hit countries, such as Greece and Spain, face even higher jobless rates that have hurt sales of moderately priced vehicles especially hard. Luxury carmakers are doing better.

The August downturn was distributed across Europe's biggest markets. Germany saw a 5.5 percent drop, despite a stronger economy than in other members of the 17-county eurozone. Registrations fell 10.5 percent in France, 18.3 percent in Spain, and 6.6 percent in Italy.

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

Analyst Carlos Da Silva at IHS Automotive said the figures suggested the market was bottoming out because the decline had slowed from 9.7 percent in the first three months of the year.

"Decline is still on the menu but the rate of descent has nearly been halved," he said.

Global auto executives remain cautious, however. They said in interviews at the Frankfurt Auto Show last week that while the European market may have reached the bottom, they 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 from 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.

Among the major carmakers, Germany's Volkswagen Group was off 11.2 percent in August while France's PSA Peugeot Citroen slid 17.3 percent. Renault Group rose 6.0 percent and General Motors was up 0.5 percent -- as a large jump in sales of Chevrolet-branded vehicles made up for a 3.4 percent fall in sales of its main European Opel and Vauxhall brands. Ford was off 1.5 percent.

Luxury brands did better. Daimler's Mercedes was up 8.9 percent, excluding its compact Smart city car, and BMW AG rose 9.5 percent, excluding its Mini brand. However, VW's Audi luxury brand, a chief competitor for Mercedes and BMW, was off 5.6 percent.

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 percent, up slightly from 24.8 percent.

The auto association also issued figures for July, which showed a 5 percent increase over the previous year. July had one more working day than the previous July, while August had one less. In July, the only major market to shrink was Italy, which was down 1.6 percent. The association releases figures for July and August together.

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