May 2009 European Car Sales Down 5%

European car sales sink 4.9 percent in May but govt payments to car buyers ease slump

BRUSSELS June 16, 2009; The AP reported that European car sales braked at a slower pace in May, falling 4.9 percent from a year ago as state handouts to car buyers eased a yearlong sales slump, an industry group said Tuesday.

Sales of new cars fell for the thirteenth month in a row from the previous year, according to carmakers' association ACEA, with only two major manufacturers -- Volkswagen AG and Fiat SpA -- selling more than last year.

Government payments for car buyers helped sales surge in Germany by 39.7 percent and in France by 11.8 percent, it said. They also cushioned a slide in Italian sales, down 8.6 percent.

But customers in other large EU nations are still wary of large purchases. British sales were down nearly a quarter while Spain saw an almost 40 percent drop. Both countries are suffering badly from a recession that has punctured a housing boom.

Strong car sales in its home market, Germany, helped Europe's biggest car maker Volkswagen escape the gloom and post a 3.1 percent rise in sales. Italy's Fiat also increased sales by 2 percent as buyers opted for its small and fuel-efficient models.

Other car makers lost sales. France's Peugeot Citroen was down 5.8 percent, Ford Motor Co. fell 5 percent, General Motors Corp. slipped 10.8 percent, Renault was down 4.4 percent and Toyota dropped 8.9 percent.

Germany luxury models also suffered, with BMW down 14.1 percent. Daimler reported falling sales for both its high-end Mercedes and its small Smart car models with an overall 8.0 percent drop.

Recession in Europe has curbed shoppers' appetite for big-ticket purchases and sent prices sliding.

Inflation in the 16 nations that use the euro was zero percent, the EU statistics agency Eurostat said Tuesday, confirming an earlier estimate, as the cost of transport fuel, telecommunications and housing fell from a year ago.

Six euro-zone nations -- Spain, France, Ireland, Belgium, Luxembourg and Portugal -- were hit by disinflation as real prices shrank compared to last year. Inflation across the entire 27-nation EU was 0.7 percent.