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European car registrations fell by 7 per cent in March, underscoring the depth of a slowdown that is splitting the industry along north-south lines.

Demand for new cars in the European Union was negative for the sixth month running, the European carmakers’ association Acea reported in a data release on Tuesday.

Registrations of cars made by France’s PSA Peugeot Citroën and Renaultand Italy’s Fiat plunged last month but Europeans bought more cars made by Germany’s Volkswagen and premium producers BMW, Mercedes-Benz and Audi than they did a year ago

Registrations of passenger cars in 27 European Union countries were 1.45m last month and 3.31m for the first quarter, 7.7 per cent lower than a year ago, Acea said.

The group noted the “contrasting performance” of the market across different countries, with those at the heart of the eurozone debt crisis among the hardest hit. Italy’s car market contracted by 27 per cent, and France’s by 23 per cent. Spain’s already depressed car market was down year-on-year by 4.5 per cent.

Germany and the UK were the only two of the EU’s top 10 car markets to show positive growth in registrations, up 3.4 per cent and 1.8 per cent on a year ago.

Europe’s mass-market automotive industry is suffering a crisis this yearbecause of flagging consumer demand and structural overcapacity, which have set off a round of deep discounting of cars by producers.

The sharply lower registrations in Italy last month in part reflect a truckers’ strike which halted production at some of Fiat’s plants. The Italian carmaker’s sales were down by 26 per cent in March on a year ago, Acea reported.

Industry analysts pointed out that the sharp drop in French car registrations was skewed downward by the fact that scrappage incentives that inflated sales were still in place a year ago.

However, Ernst & Young analyst Peter Fuss wrote the number was “also a reflection of the ongoing economic weakness in the country that could push down sales in future months”.

France’s biggest carmaker, Peugeot-Citroen, saw a 19 per cent drop in registrations, and Renault’s were down 21 per cent. Demand for General Motors’ German Opel and UK Vauxhall brands were 10 per cent lower than a year ago.

Registrations of cars made by Ford Motor, Europe’s no 4 carmaking group by sales, fell by 8 per cent last month.

Germany’s premium carmakers and VW all reported single-digit gains in registrations of their cars last month. However, demand for cars made by VW’s Spanish Seat brand were 16 per cent lower.

Sergio Marchionne, Fiat’s chief executive and president of Acea, has called for an EU-driven solution to the European car industry’s chronic overcapacity. However, executives at VW, Europe’s largest carmaker by sales, have said they oppose the idea.

Source: FT.com