European Car Sales Hit 20-yr Low as Key Markets Suffer

European car sales plunged to their lowest May 2013 level in two decades, eroding manufacturers' hopes for a recovery this year after a rebound the month before.

Figures on Tuesday from the Association of European Carmakers showed 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 percent 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 said.

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

"It seems as if April was nothing more than a bright spell" in the "horrendous" European market, said Carlos Da Silva, a Paris-based analyst with market researchers IHS Automotive.

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.

Total five-month EU sales fell 6.8 percent to 5.07 million vehicles.

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

A separate study by business consultants AlixPartners showed 58 of Europe's top 100 car plants are making losses as they are poorly utilized, an increase of almost half within two years.

Sales of new cars in austerity-strapped Western Europe may stagnate at around 12 million vehicles for the foreseeable future from 2014, according to AlixPartners.

BRITISH SALES UP

In contrast, sales in Britain remained robust, as Europe's second-biggest market looks at a 15-month run of increased sales, posting sturdy growth of 11 percent in May.

France's Peugeot, which is cutting 8,000 jobs and closing a domestic plant to stay afloat, ranked as May's biggest casualty among the largest automotive groups, with an additional 13.2 percent sales plunge, followed by GM's 11.3 percent drop.

Volkswagen, Europe's No. 1, slid 2.8 percent.

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

Conversely, Mercedes sales again bucked the market decline with a 2.8 percent monthly gain, powered by a series of new models, while the BMW brand fell 8.1 percent and VW's Audi dropped 3.2 percent.

Meanwhile, South Korea's Hyundai Motor Co, already among the biggest mass-market gainers last year, saw EU sales of models such as the i30 compact rise 1.9 percent in May, limiting the year-to-date drop to 1.9 percent.

"Car buyers are looking at more fuel-efficient cars," in response to emissions-based vehicle taxation policy, Chief Operating Officer Allan Rushforth said. "The European car market is increasingly hard-wired into fiscal policy."