European Car Sales Highest in Two Years Due to Economic Upturn, Government Incentives

Car sales in Europe jumped last month to the highest number in more than two years thanks to a waning recession, lower prices and a government incentive program in Spain, Bloomberg reports.

Vehicle registrations in September increased 5.5 percent to 1.19 million vehicles, the Brussels-based European Automobile Manufacturers Association said Wednesday in a statement. The rise reduced the decline this year to 4 percent, for total deliveries of 9.34 million cars.

"The European market is bottoming out and the next months will probably see a slow improvement," Frank Schwope, a Hanover, Germany-based analyst with NordLB, told Bloomberg. "After refraining from buying a new car because of the economic crisis, vehicles are now so old that they can't be repaired anymore and need to be replaced."

European automakers Renault and Daimler saw the largest gains last month when an economic upturn in the area inspired an increase in consumer spending.

Spain had the largest increase among the region's five biggest markets. Because of a government-backed program that discounted vehicle trade-ins by as much as 2,000 euros ($2,700), demand for vehicles rose 29 percent in Spain. Dealer rebates in Germany were the highest in three months, according to Bloomberg.

"Car sales in the EU are showing signs of improvement, indicating that the worst is behind us," Peter Fuss, a partner at Ernst & Young consulting company in Frankfurt, told Bloomberg in an e-mail. "The sales, however, continue to be artificially boosted by huge discounts and self-registrations by dealers."

European sales last month for Paris-based Renault jumped 22 percent, while Germany-based Daimler, the third-biggest maker of luxury vehicles, reported a 12 percent increase and demand at regional market leader Volkswagen rose 5.8 percent. Detroit-based General Motors saw an increase of 5.4 percent.

"The situation is clearly improving," Carlos Da Silva, a Paris-based analyst with IHS Automotive, told Bloomberg in an e-mail. "Europe is not in brilliant shape, yet the underlying trend of the market is calling for a certain dose of optimism."