BMW Group's EU and EFTA sales fell 6 percent last month with BMW brand sales down 5 percent and Mini volume down 10 percent. Rival Audi's sales rose by 17 percent. Daimler's registrations rose by just over 1 percent with Mercedes brand down 2 percent and Smart sales up 8 percent. Mercedes was the only German luxury brand reporting full-year growth.
Recovery taking hold
Carmakers are predicting a gradual increase in European demand this year after a sovereign-debt crisis and recessions led to a six-year contraction in deliveries through 2013. Consumers replacing old cars will probably account for some of the recovery, though gains are also being fed by continued incentives from automakers and a government vehicle-scrappage program in Spain.
"The recovery process in Europe is seemingly taking hold," Matthias Wissmann, head of Germany's VDA auto industry lobby, said. "People are building up trust again in the strength of economies."
Ian Robertson, BMW's sales chief, said at the Detroit auto show earlier this week: "Europe still remains quite tough. It's going to take several more years for the market to reach previous levels, he said. "You still have unemployment," and "an economy that is extremely fragile."
Ford of Europe CEO Stephen Odell said at the Detroit show that vehicles on European roads have been in use for an average seven to eight years, unusually long for the market, prompting buyers to seek new models. At the same time, unemployment at near record highs in the countries using the euro will hold back growth prospects, he said.
Erich Hauser, a London-based automotive analyst at International Strategy & Investment Group, said demand may be helped as an unusually high number of car leases expire this year, leaving consumers and corporate customers to decide whether to keep the model or buy a new one.
Another signal of potential growth is a recent increase in used-vehicle prices, as "the saving to be had from a used car gets smaller versus a new car," he said.
UK leads growth
Registrations rose in the five biggest European auto markets in December, with jumps of 24 percent in the UK and 18 percent in Spain, where the government revived a scrappage incentive program in October. In Germany sales were up 5 percent while registrations in France rose by 9 percent. Italy swung to growth of 1 percent.
The UK was the only major market to show growth for the full year with 2013 sales up 11 percent to 2.26 million. Germany's new-car market was down 4 percent to 2.95 million, France fell 6 percent to 1.80 million, Italy's registrations declined by 7 percent to 1.30 million while Spain was down 4 percent to 722,703.
For 2014, most industry executives and analysts expect low single-digit growth while cautioning that automakers are likely to see further losses as pricing remains under pressure due to chronic excess capacity.
Carlos Da Silva, manager for European light vehicle sales forecasts at IHS Automotive, said December's double-digit was partially driven by automakers artificially boosting demand to hit internal volume targets through tactics such as self-registrations.
He said 2014 will see limited growth but the effects of the longest European auto crisis will linger because the downturn had accelerated structural changes such as a lower social acceptance of cars, a growing green consciousness and less dynamic demographics.
Peter Fuss, senior advisory partner at Ernst & Young consulting company's automotive unit, said: "The market has bottomed out and the worst is clearly behind us." Demand in 2014 will show modest gains, though "this growth will continue to be artificial: one that is driven by discounts and self-registrations by dealers," Fuss said.
Bloomberg and Reuters contributed to this story