European car sales hit 20-yr low for May as key markets suffer

Berlin, June 18 –  European car sales last month plunged to the lowest level in two decades for May, further eroding manufacturers' hopes for a recovery this year.

Germany, France and Italy, accounting for about half of the embattled region's sales, suffered declines at or near double-digit percentage levels.

Registrations across the 27-nation European Union dropped 5.9 per cent to 1.04 million cars from 1.11 million a year ago, the lowest since May 1993 when sales fell below 1 million, the Association of European Carmakers said on Tuesday.

A month earlier, EU-wide new car deliveries had risen for the first time in 19 months, though helped by extra sales days related to early Easter holidays.

After falling to a 17-year low in 2012, European car demand is expected to contract further this year, squeezing mass-market brands still harder between excess capacity and cut-throat pricing. Five-month EU sales fell 6.8 per cent to 5.07 million vehicles.

The German market, which resisted much of last year's slump, shrank 8.8 per cent over five months. Sales in France and Italy even fell 11.9 and 11.3 per cent, respectively, as unemployment and austerity measures curb consumer spending.

By contrast, Britain remained a tower of strength. Europe's No. 2 market again posted sturdy growth of 11 per cent in May, extending the year-to-date gain to 9.3 per cent.

France's Peugeot ranked as May's biggest casualty among the largest automotive groups, with a further 13.2 per cent sales plunge, followed by GM's 11.3 per cent. Volkswagen , Europe's No. 1, only slid 2.8 per cent.

Ford Motor Co, scrapping European plants and thousands of jobs, gained a respite as its sales were broadly flat in May while year-to-date deliveries tumbled 12.8 per cent.

Conversely, Mercedes sales again bucked the market decline with a 2.8 per cent monthly gain, while the BMW

brand fell 8.1 per cent and VW's Audi dropped 3.2 per cent.

VIa:Reuters