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Germany's car market falls by 17pc as European sales head for 20-year low

EUROPEAN car sales are sliding to a 20-year low after a plunge in Germany last month removed the main buffer for carmakers across the region and record unemployment choked consumer demand.

Registrations in March fell 10pc to 1.35 million vehicles, the 18th consecutive monthly decline. Germany's car market plummeted by 17pc, the Brussels-based European Automobile Manufacturers' Association, or ACEA, said yesterday.

First-quarter deliveries in the region dropped by 9.7pc to 3.1 million cars.

Volkswagen, BMW and Daimler, which last year shrugged off Europe's decline, are forecasting flat 2013 earnings as investor confidence falls in Germany, the European Union's biggest economy.

A recession stemming from the sovereign-debt crisis has led to 12pc unemployment in the 17 countries sharing the euro, the highest since records began in 1995.

Freefall

"The western European passenger-car market is on track this year to hit levels last seen in 1993 and Germany seems to be in a freefall," Max Warburton, an analyst at Sanford Bernstein in Singapore, wrote in a report to clients.

"While unit profitability in Germany is not nearly as high as China, it's still a critical driver of German carmakers' earnings and the current trend is quite disturbing."

The German car-sales decline was the steepest among Europe's five biggest car markets and compared with an 11pc drop in February.

The UK, where sales increased 5.9pc, overtook Germany in deliveries in March, according to the ACEA.

Deliveries at Wolfsburg-based VW, the continent's market leader, dropped 9.3pc, with the namesake brand posting a 15pc decline. BMW, the world's biggest luxury-car producer, sold 4.7pc fewer vehicles in Europe last month.

Daimler posted a 1pc European sales decline, with registrations at the two-seat Smart division dropping 16pc and demand at Mercedes rising 0.8pc.

Daimler, which has said first-quarter profit will fall, plans to update 2013 forecasts this month once it assesses a European market that it has said shows no signs of recovery.

European sales at Paris-based Peugeot Citroen, the region's second-biggest carmaker, and Ford dropped 16pc. (Reuters)

Irish Independent