Europe sales extend winning streak on large order backlogs

European new-car sales maintained double-digit growth in September despite higher interest rates raising the cost of acquiring a car.

New-car registrations rose 11 percent to 1.17 million units in the EU, EFTA and U.K. markets, according to data from industry lobbying group ACEA on Friday, with order backlogs helping manufacturers overcome pressure from higher financing costs for customers.

The result marked the 14th consecutive month of growth in Europe.

Sales of full-electric vehicles also edged higher by 13 percent to 187,358.

Europe’s car market is still feeding off pent-up demand, which is helping to offset economic headwinds and high inflation straining consumer budgets.

Bloomberg Intelligence this month raised its new-car sales forecast for the region to 14 percent for this year, up from 9 percent, but said easing supply-chain issues will see car output exceed demand during the fourth quarter.

Renault this week said its order book in Europe has remained robust, but there are signs of consumer reticence.

Volkswagen Group’s third-quarter EV orders have fallen short of its targets, particularly in Europe, forcing the company to lay off temporary workers and cut shifts in German factories in recent weeks.

This year’s strong gains come off a low base and passenger car demand still remains roughly a fifth below pre-pandemic levels, against a darkening outlook.

Germany, Europe’s largest economy, has not grown in more than a year and appears set for a double-dip recession.

In addition, the threat of a wider war in the Middle East has the potential to disrupt the global economy if more countries are drawn into the Israel-Hamas conflict.

Gains in France helped offset a 29 percent decline in Germany, where EV incentives for business buyers ended.