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July 15, 2010, 5:10 a.m. EDT

European New Car Registrations Fall

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By Christoph Rauwald

FRANKFURT—Registrations of new cars in Europe declined for a third consecutive month in June, as the industry braces for a bumpy ride in coming months following the end of various state-backed scrapping incentive plans in the region.

New car registrations fell 6.2% in June from a year earlier to 1.38 million vehicles. Gains of 10.8% in the U.K., 26% in Spain and increases in some smaller European countries failed to offset declines of 32% in Germany, 19% in Italy and 1.3% in France, the European Automobile Manufacturers Association ACEA said Thursday.

In the first half of the year, the European car market eked out a 0.6% rise to 7.5 million vehicles.

Scrapping plans revived demand in many European car markets last year after car sales tanked during the economic downturn, but most of these have since expired or are being fazed out. Typically, the plans offered a discount if car owners traded in old, gas-guzzling cars for new, more fuel-efficient vehicles.

"We expect the rate of decline to accelerate in the second half of 2010 as year-on-year comparisons get tougher and scrappage schemes run out, leaving third quarter down a forecast 18% and fourth quarter down 27%," Barclays Capital said in a recent note to clients.

Sanford Bernstein analyst Max Warburton , however, noted that the anticipated market downturn in Europe appears to be less harsh than feared by some. "Recent sales data is proving quite robust despite incentives having expired ... leading many to realize that scrap incentives were not all 'pull forward' demand but rather saw used car buyers persuaded into the new car market for the first time," Mr. Warburton said. "Car buyers are returning to European showrooms, albeit slowly, to buy larger, more profitable vehicles [such as] sedans, minivans, [and sport-utility-vehicles]," he said.

Volkswagen /zigman2/quotes/206736865/delayed DE:VOW -0.62% AG, Europe's largest auto maker by sales, posted an 8.1% fall to 288,096 new car registrations in June. The VW, Audi /zigman2/quotes/207972355/delayed DE:NSU -0.63% AG and Skoda brands all posted weaker results, with the troubled Spanish Seat marque showing the steepest decline within the group as it failed to benefit from a soaring domestic market.

Italian car maker Fiat SpA posted a 20% slump in new car registrations in Europe last month to 100,399 vehicles, triggered by a weak domestic market.

PSA Peugeot-Citroën /zigman2/quotes/203546414/delayed FR:UG +1.47% saw European registrations shrink by 5% to 187,401 cars, while French peer Renault /zigman2/quotes/200919924/delayed FR:RNO +1.47% SA posted a 3.8% rise to 150,257 cars, helped by its Romanian Dacia low-frills brand.

General Motors Co.'s European division gained some market share as registrations edged down 0.2% to 133,034 vehicles, with the core Opel and Vauxhall brands posting a 5.3% rise to 115,311 cars. U.S. peer Ford Motor /zigman2/quotes/208911460/composite F -1.31% Co., meanwhile, faced a 15% decline to 125,690 new-car registrations.

German luxury-car maker BMW /zigman2/quotes/209548467/delayed DE:BMW -0.38% AG posted a 7.1% rise to 80,116 cars fueled by its core brand, the latest sign of a faster-than-expected recovery in the premium segment after a woeful 2009. The scrapping plans last year mainly revived demand for smaller vehicles, so luxury-car makers have little exposure to the current market downturn in Europe.

Daimler /zigman2/quotes/205332368/delayed DE:DAI +0.74% AG's registrations in Europe were down 7% at 69,180 vehicles, with the ailing Smart minicar brand posting a 10% decline to 8,470 vehicles.

Japan's Toyota Motor /zigman2/quotes/200537742/composite TM +0.78% Corp. saw a 12.4% decrease to 56,973 registrations in Europe.

Write to Christoph Rauwald at christoph.rauwald@dowjones.com

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