European car sales increase but growth is sluggish
European car sales rose at the slowest pace in six months in May as buyers' concerns about unemployment and the Greek sovereign debt crisis held back demand at Volkswagen and Renault.
Registrations increased 1.4pc to 1.15m vehicles from 1.14m a year earlier, the Brussels-based European Automobile Manufacturers' Association, or ACEA, calculates.
That pared the gain in the first five months of the year to 6.7pc for a total 6m cars.
The drop comes as forecasters pare economic predictions for European and global growth and consumer confidence in the 19 countries using the euro dropped a second consecutive month in May, with plans for purchases declining from April.
"The ongoing talks on Greece do have an effect on consumers," said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. "It doesn't help sentiment as the potential effect of the country leaving the euro is stoking uncertainty." May marked the 21st month in a row of European car-market expansion, though the growth was the most sluggish since a 1.2pc increase in November.
While the Eurozone's unemployment rate has receded from record highs set two years ago, European Central Bank president Mario Draghi said earlier this month that it remains a concern to policy makers.
"Adjusted for public holidays, the key markets are continuing their gain from a low base," said Frank Biller, a Stuttgart, Germany-based analyst for LBBW. "There's no reason to be euphoric, but we do have an unbroken upward trend, even with the slowdown in May."
Among Europe's biggest car markets, sales declines of 6.7pc in Germany, the largest, and 3.5pc in France, which ranks third, weighed on regional growth. Registrations rose 14pc in Spain, 11pc in Italy and 2.4pc in the UK.
Renault was the only manufacturer among Europe's five top car sellers to post group sales growth in the region in May, with a 5.4pc gain. That compares with a 15pc jump in April for the French car-maker, which has been benefiting from demand for the Captur sport utility vehicle. Sixth-ranked Fiat Chrysler sold 9pc more cars in Europe last month. Fiat offered an average 15.7pc off sticker prices in Germany last month and Ford provided 14pc reductions, with both deepening their discounts from April.
Daimler, whose Mercedes-Benz brand is the world's third-biggest luxury-car manufacturer, reported a 12pc increase in European sales in May because of an 84pc surge in demand at the Smart city-car division, which has updated its main two-seat model and added a four-seat version. European registrations by BMW rose 7.9pc as a revamped model line prompted a 36pc jump at the Mini compact-car unit.
European deliveries by Volkswagen, the regional industry leader, fell 2pc. VW's Audi division posted a 5.9pc drop. Second-ranked PSA Peugeot Citroen sold 5.2pc fewer cars.