European car sales boosted by buoyant Germany

Germany and France continued to be bright spots for new-car sales in March while the Spanish, Italian and UK markets slumped amid economic misery and a hangover from last year's scrappage schemes.

In Germany, new-car sales rose 11.4 percent to 327,921 last month compared with March 2010, according to the KBA federal motor transport authority. In the first three months, car sales in Germany increased 13.9 percent to 763,403.

Rising consumer confidence and low unemployment are key reasons for the increase, Jonathon Poskitt, head of European sales forecasting for J.D. Power Automotive Forecasting, told Automotive News Europe.

"Germany is well ahead of other markets. Spain and Italy are really struggling. France is still looking very strong, but the country's selling rate should ease up as the year goes on," he said.

French new-car sales rose 6.1 percent to 257,631 in March, automakers' association CCFA said, as the market benefited from an expiring scrappage program allowing car owners to trade in their old models for new cars.

March was the last month expected to show the incentive scheme's effects, as cars bought before the program expired in December could be registered until the end of last month.

CCFA President Patrick Blain said after a "very satisfying" first quarter, he saw the French market declining 8 percent for the year compared with a previous forecast for a 10 percent dip.

In the first three months of the year, French new-car sales rose 8.9 percent to 647,552 units.

Trouble in Spain, Italy, UK

Car sales in Italy and Spain showed steep declines in March compared with a year ago when volumes were boosted by the scrappage incentives.

In Italy, sales fell 28 percent in March to 187,687 vehicles, according to the Italian Transportation Ministry. The figures look bad because March 2010 was a strong month for sales as it was the last month when buyers could register new cars bought with government scrappage incentives.

Spanish new-car sales fell 29.1 percent to 88,396 in March, the ninth straight month of falls after the removal of government subsidies last July.

Said Poskitt: "Spain is suffering because of its weak economy and an unemployment rate of 20 percent."

In the UK, where government austerity measures are hitting consumer confidence, new car registrations fell 7.9 percent to 366,101 in March, according to the Society of Motor Manufacturers and Traders (SMMT).

UK registrations were down by 8.7 percent to 558,336 over the first three months of the year, the industry body said.

The SMMT forecasts the 2011 market will drop by five percent to 1.93 million units.