BRUSSELS - May sales dipped slightly to 1.15 million vehicles, dragged down by a sharp fall in French and German sales. But the drop was not seen as a warning of trouble ahead.
Sales are expected to recover in both countries and rise moderately for the year in Europe overall.
Last month, carmakers with the newest products outperformed the rest.
Top performers included Seat, Skoda, Fiat, Jaguar, Nissan, Honda and Volvo. Brands that fell faster than the market included Volkswagen, Opel/Vauxhall, Ford, Peugeot, BMW and Mercedes. Most of these marques have older vehicles or depend heavily on Germany for sales.
The decline in Germany of nearly 13 percent was blamed on a good April. VW had announced a price rise for 1 May, and sales were pulled ahead.
Tax incentives could change the picture in Germany. As of 1 July, cars without catalytic converters and those that emit higher levels of pollution will be heavily taxed. This is expected to push new car sales.
'It's a transfer from the old car market to the new. The tax will have some of the same effects as the French or Spanish government incentives,' said John Lawson, an analyst at Salomon Brothers. 'This is the German stick rather than the French carrot. It penalizes people with old cars and encourages them to buy new ones through the tax system.'
Last year France offered an incentive to scrap old cars.
The 23 percent slump in France reflects the absence of last year's incentive, and the socialist victory in national elections.
'France will begin to approach normal numbers. This has been a hangover,' said Lawson.
Incentives pushed the Italian market up 43 percent. But Fiat Group, whose sales in Italy went up an estimated 41 percent, did not see the highest increase. Sales of Opel products went up about 51 percent. Ford rose about 42 percent. PSA sales were up 58 percent and Renault jumped 49 percent.
VW continues to lead the European market, but its sales show sharp drops for the Golf and the Polo. The Passat continued to sell well, with sales up by more than 4,000 units.
Ford's Fiesta and Escort sales fell dramatically despite heavy incentives and price adjustments in key markets such as Germany. Ford sold more than 15,000 units of the Ka, which is believed to be cannibalizing the Fiesta. Mondeo sales were flat, despite a facelift.
Like the Golf, the GM Astra is near the end of its career, and sales are suffering. The Corsa, into its fifth year, is doing well to achieve flat sales. The newer Vectra and Omega were both down.
Sales of Fiat's Bravo/Brava are beginning to decline. The Punto was up by more than 10,000 units, and sales of the ageing Cinquecento also rose. Both vehicles benefit from Italian incentives, which provide a big discount for entry-level cars.
Nearly every brand in the PSA Group declined, reflecting the sales situation in France. For Renault, only the Espace minivan and Megane lower-medium car sold significantly more.