FRANKFURT -- New-car registrations in Germany rose 3 percent in October but the British market plunged nearly 11 percent, underscoring patchy demand amid Europe's fragile economic upturn, official data showed on Friday.
Powered by aggressive discounting and a wave of new models, registrations in Germany -- Europe's biggest car market by far -- gained for the seventh month in a row, to 291,000 vehicles.
That brought registrations to 2.79 million units in the first 10 months of 2005, also a year-on-year gain of 3 percent, according to preliminary data from car industry association VDA.
"Although foreign orders and exports developed positively and passenger car registrations in Germany showed a slight increase for the seventh consecutive month, political events have had a unsettling impact on domestic orders," VDA said.
The statement was referring to the political drama in Berlin, where no new government has yet emerged from an inconclusive election in September.
"Germany remains extremely difficult," said CSFB car sector analyst Harald Hendrikse. "German corporates are generally just not spending a lot of money because they have no idea about the tax situation or even the government situation going forward."
Corporate customers can account for 60 to 70 percent of German demand for premium producers such as DaimlerChrysler's Mercedes-Benz or BMW, he noted.
New-car registrations in Britain retreated 10.8 percent to 152,497 units last month, the Society of Motor Manufacturers and Traders said, more evidence that many Britons have soured on big-ticket purchases.
U.K. registrations, which closely mirror sales, fell 5.6 percent in the year to date in the second-biggest European market.
"2005 has been a tough year for the new car market," SMMT Chief Executive Christopher Macgowan said. "The downturn in consumer spending has hit dealerships across the country."
SMMT predicts that full-year registrations will slip 5.2 percent to 2.435 million units.
A sharpening price war failed to spur car sales in France and Spain in October, but Italian registrations rose due to new models and low-interest car loans. Car sales in Italy, Europe's third-largest auto market, rose 5.5 percent from October 2004.
In the slightly smaller French market, sales fell 5.8 percent in the worst October in six years while Spanish registrations tumbled 9.6 percent.
Slack sales are a further blow to carmakers already struggling to cope with a strong euro, higher raw-material prices and strong downward pressure on prices spawned by chronic overcapacity.
"We expect that competitive pressures will further increase, especially in the Chinese and U.S. markets," Volkswagen, Europe's biggest carmaker, said on Thursday after releasing third-quarter results that missed market expectations.
"Nor do we expect any easing in the cost of raw materials in the foreseeable future. Moreover, we believe that the high oil price and the resulting record high fuel prices will further dampen automotive consumer confidence," it added.
Automakers are trying to offset these headwinds and soft sales in big markets by wringing efficiency from operations, increasingly by cutting thousands more jobs.