Government incentives on small, inexpensive vehicles have cut the rate of decline in European sales.
New-vehicle sales in 28 European markets dropped to 1.27 million units in May, down 4.9 percent from May 2008. It was the 13th straight month of lower sales, but the smallest decline during that time.
In western Europe, sales rose in four countries with scrappage incentives, led by Germany's 39.7 percent gain.
Sales in Italy slipped 8.6 percent in May, despite incentives. Spain, down 38.7 percent, and the United Kingdom, off 24.8 percent, have incentive plans pending but not yet in effect. The other eight markets without incentives were down 12 to 49 percent
The lesson for U.S. legislators debating a bill that gives tax credits to consumers buying a new car with better fuel efficiency? Such laws spur sales once enacted, but proposed or pending laws hurt sales because prospective buyers delay purchases.
European buyers are going for smaller or less-expensive vehicles, which are more likely to qualify for European incentive programs.
In May, every automaker that gained sales was a value brand or small-car specialist. All others fell.
Premium brands BMW, Volvo, Saab, Jaguar and Land Rover and Lexus registered double-digit declines.