European carmakers face a big slide in new-car sales in the second half after June volume fell in France and slowed in Spain as scrappage schemes are phased out and cautious consumers pull back from major purchases in the face of economic uncertainty.
In France, June car sales were 1.2 percent lower year-on-year, according to data released on Thursday.
Spanish car sales could fall over 30 percent in the second half due to tax hikes and subsidy cuts after they rose by 25.6 percent last month, Spain's carmakers association ANFAC said.
IHS Global Insight analyst Carlos Da Silva said the relatively gentle decline in French car sales in June would be unlikely to last.
"I think until the end of the year we'll see much steeper declines. We are anticipating double-digit drops, although not for every month, and a very bad last quarter because we are comparing a very strong end of the year last year," he said.
Worries over government reforms to reduce deficits and the economic situation in the euro zone would add to the effect of the end of scrappage incentives, Da Silva said.
"Incentives and (manufacturer) discounts cannot last forever ... on top of that all the information on Greece, Portugal, here in France the pension reform is not giving them very good signs for the future. Maybe now we'll see a lot of people coming back to saving what they can to see what happens next year."
Double dip recession warning
Last month, the World Bank said a double-dip recession could not be ruled out in some countries if investors lose faith in efforts in Europe and elsewhere to tackle rising debt levels.
While France's scrappage scheme is still in place, from July 1 carmakers will get 500 euros, down from 700 euros, to trade in their old vehicles.
In France, six-month sales are up 5.4 percent for the year to date.
Some carmakers have fared better than others, however, with Europe's second-largest carmaker, PSA/Peugeot-Citroen, posting a 5.6 percent decrease in June sales, while Renault group sales were 1 percent lower.
Sales of light commercial vehicles in France, which were not boosted by scrappage incentives, rose 14.9 percent in June, and showed a 10.9 percent increase in the first six months, from a very low base, as businesses that had put off renewing their fleets in the depths of the crisis bought new vans.
In Spain, June car sales rose 25.6 percent to 121,483 units, boosted by scrappage subsidies for car buyers that ran out at the end of the month and buying ahead of Thursday's 2 percentage point hike in VAT.
June will the last month affected by the incentives scheme and the growth in volume slowed from May's 44.6 percent.
"In H2 we expect the trend to worsen, with falls of over 30 percent due to the economic situation, the contraction of domestic demand, credit tightening, high unemployment, a 2 point rise in VAT and the end of the Plan 2000E (government subsidies for car buyers)," ANFAC said in a statement.
Reuters contributed to this report