European sales rose 3% in August, ending 13 months of falls

Europe's new-car market returned to growth in August for the first gain in 13 months.

Registrations in the EU, UK and EFTA markets rose 3.4 percent to 748,961 vehicles last month, industry association ACEA said on Friday.

Brands with strong gains included Porsche, up 32 percent; Peugeot, up 23 percent; Mercedes-Benz, up 19 percent; and Dacia, up 17 percent.

Among losers were Jeep, down 49 percent; Lexus, down 36 percent; Renault, down 23 percent;  Volvo, down 14 percent; and Jaguar, down 11 percent.

August's sales rise compares to poor year-earlier performance and remains well below pre-pandemic levels.

Automakers are seeing glimmers of improvement with some supply-chain constraints such as the lack of semiconductors beginning to ease.

However, the respite may be short-lived as record inflation and an unprecedented energy crisis threaten to put off buyers.

Runaway inflation and a slowing global economy are clouding sales forecasts.

"High inflation, rising interest rates and waning consumer confidence, coupled with customers extending the replacement cycle amid the improved reliability of newer cars and swiftly changing technology may challenge underlying demand in 2023 and beyond," Bloomberg Intelligence’s Gillian Davis said in a note.

Forecasting vehicle purchases remains difficult as consumers worry about surging energy bills and the risk of rolling blackouts as Russia cuts gas deliveries.

The cost of energy and rising interest rates squeezing car buyers are likely to cap high vehicle prices that gained when semiconductor shortages curtailed car availability.

European Central Bank officials have said they expect to raise borrowing costs further at their next several meetings after last week's jumbo rate hike.

All five major European markets reported rises in August.

Registrations grew by 3 percent in Germany, 3.8 percent in France, 1.2 percent in the UK, 9.9 percent in Italy and 9.1 percent in Spain.

Bloomberg and Reuters contributed to this report