European new-car registrations rose 2 percent in August in the 12th consecutive month of higher sales. However, analysts and executives pointed to a heavy reliance on government incentives in Spain and a fall in sales in Germany, France and Italy as signs that the region's recovery may be faltering.
Registrations increased last month to 701,118 vehicles from 688,464 a year earlier, industry association ACEA said today in a statement. Sales in the eight months through August jumped 6 percent to 8.64 million cars.
Demand for cars in Europe is reviving from a two-decade low last year that stemmed from a sovereign-debt crisis and recession in the countries sharing the euro.
The VW Polo and Ford’s competing Fiesta helped propel sales jumps last month exceeding 14 percent for those brands. Manufacturers tried to win buyers with discounts that Barclays estimated averaged 20 percent in Germany and 18 percent in France.
"A slowdown in year-on-year industry growth during the third quarter is a consequence of a slight market recovery in the second half of 2013," Allan Rushforth, head of European operations for Hyundai, said in an email before ACEA released its figures. "Where there is still growth for the industry, it is driven by heavy incentive spending."
Peter Fuss, automotive expert at Ernst & Young, said it had been the second worst August in the past 12 years for car sales in the EU. "The tentative recovery in the European auto market seems to be running out of breath," he said.
"Barring any new international crisis, we’ll see a progressive recovery up until 2020, though we don’t forecast a return to 2007 levels by then," Francois Jaumain, a partner at consulting company PwC, said. With vehicle ages averaging 8.2 years, "there’s a point when customers will need to change their cars."