European June car sales slow as Brexit vote reduces confidence

European car-sales growth slowed in June as the British vote on exiting the European Union weighed on business and consumer confidence.

Registrations in the EU and EFTA markets rose 6.5 percent last month from a year earlier to 1.51 million vehicles, industry association ACEA, said today in a statement. June marked the 34th consecutive month of auto-sales gains in Europe, though the growth rate was the slowest since March.

First-half sales increased 9.1 percent to 8.09 million cars.

Rising demand in most large EU markets last month helped to drive growth at Renault and Fiat Chrysler, along with Asian brands and European premium automakers.

Renault posted the strongest gains in June among the region’s 10 largest car sellers, with a 20 percent surge propelled by the main brand’s Captur, Kadjar and Espace crossovers.

Fiat Chrysler registrations were up 13 percent, boosted by 14 percent growth at Fiat brand, which has just launched its new Tipo compact car, and by a 16 percent gain in Jeep sales.

Among Japanese automakers, sales at Toyota and Lexus combined grew by 6.7 percent while Nissan's volume fell by 2.9 percent. Korean brands Hyundai and Kia saw their sales rise 13 percent and 14 percent respectively.

Premium automakers BMW and Mercedes-Benz had a good month. BMW brand sales rose 15 percent while Mini was up 20 percent. The Mercedes and Smart brands both had 16 percent gains.

VW brand dips

Volkswagen Group's volume rose 1 percent with an 8.6 percent increase at Skoda offsetting a 0.6 percent fall at VW brand. Among other group brands, Audi sales were flat, Seat's volume fell by 2.3 percent and Porsche registrations were down 2.6 percent.

VW Group's market share dropped to 23.2 percent from 24.4 percent a year earlier with VW brand's share down 0.8 percentage points to 11.0 percent as the automaker's emissions-rigging scandal continued to weigh down the company.

PSA Group's registrations fell by 1.1 percent with a 0.7 percent rise in Peugeot brand's volume contrasting with a 2.7 percent decline at Citroen and an 8.2 percent plunge in DS sales.

Ford's volume dipped by 1.1 percent while sales at General Motors' Opel/Vauxhall unit rose by half a percent.

• Download PDF, below, for sales by automaker, brand and markets.

Two of Europe's five biggest markets recorded double-digit sales gains, led by Italy and Spain where registrations rose 12 percent and 11 percent respectively, while French sales increased 0.8 percent and the region's No.1 market Germany posted 8.3 percent growth. Of the top five national markets, sales declined only in the UK, the second-biggest, sliding 0.8 percent, weighed down by a 20 percent decline in VW sales and an uncertain economic outlook.

Brexit pain

The June 23 referendum that approved the UK’s departure from the EU, known as Brexit, will probably hold back economic growth in countries using the euro, according to the European Central Bank, which has been keeping interest rates at or below zero in a stimulus drive. Prior to the vote, euro-area economic confidence weakened amid questions about how a pullout may affect companies and households.

"Drastically reduced consumer confidence in the U.K. following the Brexit vote will probably result in a significant hit to sales," Peter Fuss, an automotive analyst at consulting firm EY, said in a report. "Not least the German carmakers will see an impact in the form of lower exports to the U.K., as cars made in Germany get more expensive for British buyers because of the weak pound."

Analysts at HSBC  said in a July 12 report: "We expect a significant market decline in the UK in terms of light-vehicle sales, but we see only limited contagion risks to Europe. There is still a lot of consumer stimulus around, mainly due to the very low interest rates."

Carlos Da Silva, manager of IHS Automotive European light-vehicle sales forecasts, said Brexit is a blow to the region but will not massively alter the course of the European market during 2016.

The full impact will be seen during 2017 and 2018 when registrations reflect customers’ decisions taken after the Brexit vote, he said. "However, without any precise road map of how and when the UK will leave the EU, it is very hard to be specific about possible influencing factors," Da Silva said in an emailed statement.

"We are not necessarily pointing to a depressed market in 2017 - there is still lots of pent up demand out there - but the pace is definitely expected to be altered in the years to come," he said.

The Italian and Spanish markets are still in a recovery phase from the downturns caused by the euro zone crisis. Portugal, Ireland and markets in Central Europe are continuing to record improvements on improving or buoyant economic fortunes as well as a general need for the replacement of ageing parcs, Da Silva said.

Bloomberg and Reuters contributed to this report