FRANKFURT -- European new-car registrations rose by 5.5 percent in September, helped by a surge in UK auto sales and an extra working day. The increase provided fresh evidence that the region's slump may be slowly bottoming out, industry watchers said.
Registrations in the EU and EFTA markets increased to 1.19 million vehicles last month compared with September 2012, industry association ACEA said in a statement today.
ACEA said nine-month sales fell 4 percent to 9.34 million cars. Industrywide sales in the region are still on track to reach a two-decade low this year in the sixth consecutive annual contraction.
The end of an 18-month euro-area recession helped to boost demand last month. Gross domestic product of the 17 countries using the euro returned to growth in the second quarter after the longest recession since the currency was created more than a decade ago.
Investor confidence in Germany, Europe's biggest economy and largest car market, rose to a three-year high this month. Consumer confidence in the UK, which ranks second in the region's car sales, was at a six-year high in September.
Recovery 'on course'
Industry watchers have been waiting to see if last month would reveal that a car sales decline in August was a blip or a signal of further problems to come. Europe's car market fell in the first eight months to the lowest level since records began in 1990.
"The worst is behind us. The decline in sales has considerably slowed and we are now witnessing signs of recovery in demand," said Peter Fuss, Senior Advisory Partner at Ernst & Young's Global Automotive Center.
"The sales, however, continue to be artificially boosted by huge discounts and self-registrations by dealers," he said. It will be at least two years before the market was strong enough to grow on its own without the aid of incentives, Fuss said.
"The western European auto market continued on its course to recovery in September," said the German auto industry association VDA.
Frank Schwope, an analyst with NordLB, said the market is bottoming out and the next months will probably see a slow improvement. "After refraining from buying a new car because of the economic crisis, vehicles are now so old that they can't be repaired any more and need to be replaced," he said.
September dealer rebates in Germany rose to an average 12 percent off the sticker price from 11.6 percent in August, the highest level since June, according to industry publication Autohaus PulsSchlag. The best deals were available on Peugeot and Renault cars, with combined average discounts of 14.9 percent. Fiat offered incentives equivalent to 13.7 percent off the list price.
"The low interest rates are pushing sales," said Fabian Schmidt, sales manager at Cologne, Germany-based dealer AK Autoport Koeln GmbH. "The zero-percent financing offer for Seat models, for example, clearly pulls in customers. We've registered more showroom traffic in the past four to six weeks."
VW, Renault boost volume
Volkswagen Group, the European auto-market leader, sold 6 percent more cars in the region last month, with demand increasing 2 percent at the main VW brand, 3 percent at Audi division, 17 percent at Skoda and 15.5 percent at Seat.
Renault's deliveries jumped 22 percent, helped by a 40 percent increase at the Dacia division and a 17 percent Renault brand surge. General Motors' European sales rose 5 percent, with its main Opel and Vauxhall brands reporting a combined 5.5 percent increase, and Chevrolet's volume rising by 5 percent.
PSA/Peugeot-Citroen had a 3 percent drop and Fiat Group's sales also slid 3 percent as the main Fiat brand's volume remained flat while Alfa Romeo and Lancia saw steep declines.
Japanese carmakers Toyota, Mazda, Suzuki and Mitsubishi also all managed to grow volumes last month, helped by a soft yen, new smaller diesel engines in their line-up and new models tailored to European tastes. Nissan sales were slightly down.
Hyundai's sales were up 6 percent while sister brand Kia's volume was flat.
BMW sold 6 percent more vehicles while Daimler reported a 12 percent increase, with a 14 percent jump at its Mercedes-Benz brand offsetting a 2.5 percent drop in Smart's volume.
Volvo reported a surprisingly strong gain of 13 percent to help its otherwise weak performance so far this year. Jaguar-Land Rover's volume rose by 10.5 percent.
Spain leads growth
Growth in the UK, France Spain helped drive September's sales increase. In Spain, where the government offers as much as 2,000 euros ($2,700) in discounts on trade-ins of older model, new-car registrations rose by 29 percent.
UK sales grew by 12 percent, the sixth month in a row where they expanded at a double digit rate. French sales rose by 3 percent.
Sales in Germany fell 1 percent while registrations in Italy were down by 3 percent.
In a sign of recovery on the ailing euro zone periphery, car demand in Greece, Ireland and Portugal -- which all accepted bailouts during the crisis -- jumped by double-digit rates.
ACEA compiles figures from European Union countries as well as Switzerland, Norway and Iceland. Croatia, the EU's 28th member state since July, will be added to the statistics as of January 2014.
Bloomberg and Reuters contributed to this report