Scrapping, tough economy hit May Europe car sales

New passenger car sales fell 9.3 percent in May in the EU as the effects of government support for the car industry slipped away and the economic environment remained difficult, industry association ACEA have announced.

Governments helped carmakers hit by the crisis last year with scrapping incentive schemes that boosted demand for new cars, but these have finished or are running out and carmakers are worried about the second half of the year.

ACEA said the May decline to a total of 1,129,508 cars registered was the second monthly decline this year and reflected “the end to government support schemes on the one hand and the further challenging economic situation on the other”.

In the first five months in the EU, new car registrations were down 1.9 percent.

Germany, Europe’s largest car market, whose scrapping scheme ended in September, saw a 35.1 percent dip in registrations. France, whose scheme is being phased out gradually, saw an 11.5 percent year-on-year decline in May.

Spain, whose scheme is still in place, saw a 44.6 percent increase in May, compared with a low comparison in 2009.

Data released at the start of June already showed a mixed picture in some key European car markets in May, with Spanish sales up, and French and Italian sales down, showing the impact of government support.

The head of French carmaker PSA Peugeot Citroen, Philippe Varin, said earlier this month that he expected the European car market to shrink around nine percent in 2010.